SAC Sacoil

TIDMSAC

RNS Number : 5612E

SacOil Holdings Limited

08 April 2011

Embargoed 8am: 8 April 2011

SacOil Holdings Limited

("SacOil" or the "Company")

Admission to Trading on AIM

-- SacOil commences trading on AIM (ticker: 'SAC')

SacOil Holdings Limited (AIM/JSE), the independent Pan-African upstream oil and gas company, today announces the commencement of trading in its shares on AIM after an introduction by the Company's Nominated Adviser and broker finnCap Limited and joint broker Renaissance Capital Limited. The Company remains listed on the Main Board of the JSE Limited.

SacOil is intent on becoming a leading independent African upstream oil and gas company with a balanced portfolio of Pan-African assets. SacOil and its subsidiaries are party to transactions pertaining to Block 3, Albertine Graben in the Democratic Republic of Congo ("DRC") and OPL 281 and OPL 233 in Nigeria.

At 7 April 2011, the Company had a current market capitalisation of approximately R1.39 billion (circa GBP127 million) on the JSE.

Democratic Republic of Congo

SacOil owns 50 per cent of the issued capital of Semliki Energy SPRL ("Semliki"), a company incorporated in the DRC, which in turn holds the oil concession rights pertaining to Block 3, Albertine Graben in the DRC ("Block 3").

A Presidential Ordinance approving the Block 3 Production Sharing Agreement has been issued to Semliki, whereby Semliki has the right to apply (after fulfilling certain contractual obligations) for an exploration permit.

On 31 March 2011, Semliki successfully concluded a farm in agreement with Total E&P RDC ("Total") pursuant to which Total acquired a 60 per cent undivided interest in, and became the operator, of Block 3.

Nigeria

Subsidiaries of the Company have entered into farm-in agreements in relation to oil concession Blocks OPL 281 and OPL 233 in Nigeria.

Oil concession Block 233 is located in the shallow water area of the Niger Delta of discovered but undeveloped oil assets.

Oil concession Block 281 is an onshore block covering some 138 km(2), and is located in the western delta region of Nigeria approximately 25 km due east from the Forcados terminal.

Robin Vela, Chief Executive Officer of SacOil commented today:

"We are delighted to be bringing the SacOil story to the wider universe of UK and European investors who appreciate and understand the long term African oil and gas growth story and investment opportunities. We believe we have a compelling proposition to aggressively acquire new acreage, as well as develop and de-risk our assets through to production, thereby establishing the company as a balanced portfolio independent African upstream company.'

ENDS

For more information please visit www.sacoilholdings.com

For further information, please contact:

UK Enquiries South African Enquiries

Tavistock Communications The Riverbed Agency

Jos Simson/ Ed Portman Raphala Mogase

Tel: +44 (0)20 7920 3150 Tel: +27 (0) 11 783 7903

finnCap Ltd

(Nominated Adviser)

Matthew Robinson/Ed Frisby

Tel: +44 (0) 20 7600 1658

About SacOil

SacOil is intent on becoming a leading independent African upstream oil and gas company with a balanced portfolio of Pan-African assets. SacOil's assets are in all phases of the upstream cycle - exploration, appraisal and near production and are currently in the DRC and Nigeria.

Strategy

SacOil has progressed its stated strategic focus of targeting the acquisition of discovered but undeveloped, or previously producing but now shut in near term producing and production assets on the African continent.

During 2011, Africa is expected to produce more oil than North America, and by 2020 it is expected to be the world's third biggest oil region, hence the recent interest in Africa's oil and gas acreage. Indigenisation laws in Africa as well as certain oil majors retreating from discovered but undeveloped marginal oilfields in Africa, provide opportunities to emerging, junior exploration and production companies such as SacOil.

The Company's vision is to successfully build SacOil into a pan-African independent upstream oil and gas company. The Company has an ambitious and aggressive acquisition-led growth strategy and the Directors believe it is well positioned to exploit its foothold in Africa.

Block 3, DRC

Block 3 is situated in the Albertine Graben, DRC and comprises an area of 3,177 km(2), which is mostly lowland (Semliki river plain) and is flanked by rift margins. Block 3 is on trend with Lake Albert discoveries in Uganda. The largest discovery in the Escarpment/Near-shore Play is Kingfisher (200MMbbl) and the largest discovery in the Victoria Nile Delta Play is Giraffe-Buffalo (300MMbbl). Block 3 is expected to contain both plays. Over 800 million barrels of recoverable oil have been discovered in the Albertine Graben, and the total resource base is estimated at two billion barrels. To date, the majority of the exploration has been within the borders of Uganda, but the DRC concessions are considered to be highly prospective, with Block 3 being close to recent significant discoveries.

Block 3 is almost a virgin exploration territory, where no seismic or other relevant data exists as yet, which could be used to define the prospects and leads. However, part of the block is covered with aero-magnetic and gravity data, and the block is also in close proximity to several discoveries and can be said to contain a prospective play. The total resource base is estimated at two billion barrels. To date, the majority of the exploration has been within the borders of Uganda, but the DRC concessions are considered to be highly prospective, with Block 3 being close to recent significant discoveries.

Total farm-in

On 31 March 2011, Semliki successfully completed the satisfaction of the conditions precedent as contained in a farm in agreement entered into with Total E&P RDC ("Total"), in terms of which Semliki will transfer to Total, a 60 per cent interest in the rights and obligations of Semliki (the "Block 3 Rights") under the Production Sharing Contract pertaining to Block 3, Albertine Graben in the DRC. The last condition precedent, being the approval of SacOil shareholders in general meeting, has been satisfied.

The Board believes that in order to effectively explore and evaluate the oil deposits of Block 3, it was necessary to form a relationship with a major international oil company which has the necessary financial capacity, technical skills and operating expertise to operate the asset. Following careful consideration of a number of potential participants, SacOil entered into detailed discussions with Total during 2010. These discussions have resulted in the conclusion of the Agreement.

As a consequence of the agreement with Semliki, SacOil received gross cash proceeds in an amount of US$7.5 million, which will permit cash flow to be released which can be utilised to fund the Company's Nigerian activities. SacOil furthermore received cash proceeds in an amount of US$1.4 million (net of costs in relation to Block 3) in full and final settlement of a loan advanced to Divine Inspiration Group (Pty) Ltd (the other 50 per cent. holder of Semliki) in respect of, inter alia, the Block 3 Rights. In addition, SacOil may receive further contingent cash consideration in an amount of US$54.0 million, in two stages up to first oil.

Total shall also carry Semliki and the DRC Government's share of the Block 3 exploration costs from the date of completion until the date on which a final investment decision is made to develop Block 3, including, but not limited to, the approval of the field's development plan and the conversion of the exploration license to a production license.

Following the completion of the Total agreement, SacOil will be significantly de-risked in terms of exploration, development and other costs. Total, in its capacity as operator, will use its reasonable endeavours to ensure that one exploration well is drilled in Block 3 before 31 December 2012.

An exploration campaign is being planned for this block and will aim to establish the presence of all the elements of the petroleum system in Block 3, define prospects and leads and eventually re-grade the resources.

Energy Equity Resources Ltd ("EER") JV, Nigeria

In the important Nigerian oil and gas market, SacOil has formed a joint venture with the established oil and gas company, EER, to acquire and/or develop oil and gas assets in Nigeria as announced by the Company on 12 October 2010. This joint venture facilitates the acquisition by the Company of interests in oil and gas assets in Nigeria, including those relinquished and disposed of by international oil companies in compliance with Nigeria's indigenisation legislation.

OPL 233, Nigeria

Oil concession Block 233 in Nigeria is located in the shallow water area of the Niger Delta of discovered but undeveloped oil assets. Oil concession Block 233 is a 126 km(2) block with a water depth of less than 30 ft and is located immediately off the coast of the central delta region of Nigeria, some 120 km due south-southeast from the Forcados terminal. The block is adjacent to giant Apoi field (>600MMbo). The AGR-TRACS (an oil and gas industry recognised independent expert) petrophysical interpretation of the Olobia-I well-logs indicates 103 ft of net oil and 54 ft of gas and condensate across five reservoir zones in the well. Most of the block is completely unevaluated by seismic surveys being the primary case for the upside potential in oil concession Block 233.

Under the farm-in arrangements, SacOil obtains a 20 per cent. participating interest and a 25 per cent. economic interest in the contractor share for production volumes up to 100 mmbbls, reducing to 20 per cent. once production exceeds this level. During the first exploration stage, SacOil will carry a substantial part of the exploration and appraisal expenditure, which requires a minimum work programme comprising one well and 100km(2) ocean bottom cable seismic data. The work programme for the second exploration phase has not yet been defined as it is contingent on the results of the Phase I programme but is currently planned to be complete by 31 December 2013.

As a result, TRACS has reported that the 2C best estimate unrisked contingent resources on OPL233 are estimated at 19.0 MMbbls, and the corresponding net 2C best estimate unrisked contingent resources attributable to SacOil once the farm-in (described further below) is completed is estimated at 3.8 MMbbls. The net 2C best estimated risked contingent resources attributable to SacOil is estimated at 1.5MMbbls.

SacOil's partner, EER intends to acquire a 3D OBC seismic survey across the oil concession Block 233 as part of the initial work programme on the Block, which comprises one well plus the 3D seismic programme. The estimated cost for the seismic acquisition and processing is US$10 million and it is anticipated that the program will commence towards the middle of 2011 with the first fast track volume for mapping purposes available in the late third quarter or early fourth quarter of 2011. The aim is to use this data to mature exploration prospects and define the location of the proposed Olobia appraisal well planned in the late fourth quarter of 2011 on this data. Future wells will be contingent on the results of the 3D seismic evaluation.

OPL 281, Nigeria

Oil concession Block 281 is an onshore block covering some 138 km(2), and is located in the western delta region of Nigeria approximately 25 km due east from the Forcados terminal. Two discovery wells were drilled, namely Obote-I in 1970 which encountered hydrocarbons at four levels between 8,720 ft and 12,350 ft, while Ekoro-I drilled in 1967 discovered eight hydrocarbon sands between 8,260 ft and 10,761 ft. It has discovered but undeveloped oil assets with an estimated recoverable contingent resource for the block of 100 mmboe (P50 as reported by TRACS, an oil and gas industry recognised independent expert) and a peak potential production rate of up to 30,000 bopd.

Following two exploration stages to 1 January 2013, SacOil is planning to obtain a 20 per cent. participating interest and a 30 per cent. economic interest in the contractor share for production volumes up to 50 mmbbls, reducing to 20 per cent. once production exceeds this level. During the exploration stages SacOil will carry a substantial part of the exploration and appraisal expenditure, which requires a minimum work programme of US$30mln/phase, to include two wells and some 3D seismic acquisition and/or seismic reprocessing.

The OPL 281 development concept assumed by SacOil's prospective partner EER envisages natural aquifer drive. The base case assumes a total of seven producers, with the 2012 appraisal well assumed to be recompleted as a future producer, plus six new producers drilled in 2013 - 2015.

The partners are in discussion with the Nigerian Department of Petroleum Resources ("DPR") for a likely minimum work programme commitment as follows:

Phase 1:

-- 3D Seismic Data - Reprocessing of existing data over the block (128 km(2))

-- No of Wells: 1

-- Financial Commitment: US$30 million

Phase 2:

-- 3D Seismic Data - Acquisition over remaining part of the block without 3D coverage (to provide full coverage over southern 10 sq km area so far not covered by OPL281 seismic survey)

-- No of Wells: 1

-- Financial Commitment: US$30 million

The partners plan to conduct an extended well test (EWT) as part of the appraisal well program in phase 1. The EWT shall be conducted using a low cost workover barge and a well test package at an estimated daily cost of US$60,000 (total cost US$2.7 mln). The DPR typically allows up to six weeks of production during the EWT. The first phase of work, including the EWT is expected to be complete by the end of 2012.

Directors

The Board comprises three executive Directors and two non-executive Directors, details of whom are as follows:

Robin Vela, aged 39, Chief Executive Officer

Robin is the Chief Executive Officer of SacOil. Robin is a professionally qualified and experienced investment banker/investment executive. He is also a UK qualified Chartered Accountant, member of the UK Chartered Securities Institute and the prize-winner in his sitting of the UK Chartered Securities Institute's diploma corporate finance examination. Robin graduated with an honours degree in economics and accounting from Bristol University.

Prior to his involvement with SacOil, Robin co-founded two separate equity investment funds and worked for top tier bulge bracket financial institutions in the City of London as a senior private equity/ investment banking executive for more than thirteen years. Robin is also an appointed consultant to the World Bank and IFC. He has a verifiable track record of leading and closing corporate and investment related transactions in the South African Development Community and the City of London.

Richard Linnell, aged 65, Non-Executive Chairman

Richard is an experienced geologist, who has worked with various companies which now form part of the BHP Billiton (SA) Group, culminating in running the Samancor manganese operations and Billiton's exploration and development activities in South Africa. He is a former non-executive director of BHP Billiton (SA) Limited and is Chairman of Coal of Africa Limited. Richard was instrumental in the establishment of the Bakubung Initiative, a multi-stakeholder project designed to rejuvenate the South African mining industry. He is a director of several listed junior mining companies.

Carina de Beer, aged 40, Finance Director

Carina is a Chartered Accountant (SA). She completed her articles with PricewaterhouseCoopers. She has extensive experience in corporate financial management and reporting, company secretarial practice and corporate governance. She is a member of the South African Institute of Chartered Accountants, the Chartered Secretaries of South Africa and the Institute of Directors. Carina is the Finance Director of the Company and the Audit Committee is satisfied that she has sufficient expertise and experience to fulfill this role.

Colin Bird, aged 66, Executive Director

Colin has a Diploma in Mining Engineering, is a Fellow of the Institute of Materials, Minerals and Mining and is a certified Mine Manager both in the United Kingdom and South Africa. The formative part of his career was spent with the National Coal Board in the United Kingdom and thereafter he moved to the Zambia Consolidated Copper mines and then to South Africa to work in a management position with Anglo American Coal. On his return to the United Kingdom he was Technical and Operations Director of Costain Mining Limited, which involved responsibility for gold operations in Argentina, Venezuela and Spain. In addition to his coal mining activities he has been involved in the management of nickel, copper, gold and other diverse mineral operations. He has founded and floated several public companies in the resource sector and served on resource company boards in the United Kingdom, Canada and South Africa.

Gontse Moseneke, aged 29, Non-Executive Director

Gontse has an extensive background in financial management and investment banking. He is part of the executive team at Encha, a diversified investment holding company. As the Chief Executive of Encha Tech (Proprietary) Limited he oversees and actively manages Encha's investments in Siemens Southern Africa, and in Nokia Siemens Networks South Africa. Through his integral involvement in the conceptualisation, setup and initial operations of New Oil Trading Limited (British Virgin Islands), an oil and gas trading company with a global focus, Gontse has gained wide experience, and built a competent rapport with some key players in the oil and gas sector globally. He has also been involved in a project by the South African Oil and Gas Alliance to develop and market South Africa's engineering and related services capability, with the aim of capitalising and exploiting the burgeoning oil and gas activities off the east and west coasts of sub- Saharan Africa. Gontse holds a Bachelor of Science degree in Statistics and Actuarial Sciences from the University of Cape Town, and a Diploma in Actuarial Techniques from the Institute of Actuaries (London, United Kingdom).

This information is provided by RNS

The company news service from the London Stock Exchange

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