SacOil in red after portfolio rationalisation

SACOIL on Thursday reported a loss of R268m for the year to February against a previous profit of R9.5m, mainly because of R510m of costs incurred on rationalising the portfolio of assets and restructuring loans due from Energy Equity Resources Norway.

Sacoil also disclosed it had instituted legal action against its former CEO Robin Vela to recover R3.3m plus interest. This represents tax due on Mr Vela’s salary that was not paid to the South African Revenue Service. It said Mr Vela was defending the action, and counterclaiming about R20m plus interest, of which R16m related to the breach of a share option agreement. Mr Vela could not be reached for comment.

The decision to exit its participation in the oil prospecting licence 281 and 233 areas in Nigeria will release Sacoil from having to find about R684.5m for future development of these two blocks. It has also helped to resolve Sacoil’s “going concern” status, which was in doubt when it last made its financial report.

As its partners buy out Sacoil’s interest in operating licences 281 and 233, it will receive immediate cash with a prospect of some future recoveries. It has made a net profit on both licence areas. The exit also frees R116m of restricted cash, bringing cash available for investment in expansion opportunities to R229.4m at the end of February.

CEO Thabo Kgogo said these steps would enable Sacoil to focus on further development of its Lagia onshore oil field in Egypt, which was generating revenue though not profit. Lagia is producing about 200 barrels of oil a day and management is targeting 1,000 barrels a day by the fourth quarter of this year.

Sacoil also has a partnership in Mozambique looking at buying gas from the Rovuma basin and transporting it by pipeline to serve the Mozambican and South African markets. Mr Kgogo said this project could be developed in stages.

Source: Business Day