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Performance Bond and Appointment of Joint Broker


(Incorporated in the Republic of South Africa)

(Registration number 1993/000460/06)

JSE share code: SCL AIM share code: SAC

ISIN: ZAE000127460

(“SacOil” or “the Company”)

Performance Bond and Appointment of Joint Broker

  • USD$25 million Performance Bond approved to secure oil concession block OPL 233 in Nigeria
  • USD$10 million cash collateral to be put towards the work program as stipulated in the production sharing contract for oil concession block OPL 233
  • Appointment of GMP Securities Europe LLP as joint broker

1. Performance Bond

SacOil is pleased to announce that it has successfully procured a USD$25 million Performance Bond (“Bond”), which enables it to assist NIGDEL United Company Limited (“NIGDEL”) to fulfil its obligations under the Profit Sharing Contract (“PSC”) on oil concession OPL 233 in Nigeria (“the Concession”). The Bond is payable to the Nigeria National Petroleum Corporation (“NNPC”).

SacOil entered into a farm-in agreement with NIGDEL and Energy Equity Resources (“EER”) dated 30 November 2010 under which SacOil and EER agreed to assist NIGDEL in the procurement of the Performance Bond as required under the PSC.

The Bond, that was issued by Ecobank Nigeria PLC (“Ecobank”), was approved on the condition, inter alia, that cash collateral in the amount of USD$10million is delivered in favour of Ecobank. SacOil has now delivered the aforementioned cash collateral through a combination of debt and equity funding and accordingly the Bond was posted on 13 April 2012.

SacOil has provided EER’s 50 per cent share of the obligations under the Bond, secured against EER’s interest in the Concession. EER is obliged to repay to SacOil its 50 per cent share of the Bond together with interest and costs associated with the cash collateral and the procurement of the Bond prior to the commencement of an agreed work program on the Concession.

The successful posting of the performance bond allows the partners to precede with the acquisition of up to 100 km2 Ocean Bottom Cable (OBC) 3D seismic survey. Results of this survey are expected to enable the optimum placement of an appraisal well following the Olobia-1 oil discovery which, if successful, will be placed on an extended well test subject to NNPC and Department of Petroleum Resources (“DPR”) approvals. Production data obtained from the extended well test should enable a better estimate of recoverable resources and the optimal design of a full field development. This would not only provide SacOil with the ability to book proved reserves, it would also provide cash flow to SacOil and its partners. Results from the OBC survey are furthermore expected to provide information on additional prospective resources in the Concession which may enhance the value of the acreage and support continued exploration and appraisal activities.

2. Appointment of joint broker

The Company is also pleased to announce the appointment of GMP Securities Europe LLP as joint broker with immediate effect.

About SacOil

SacOil is an African independent upstream oil and gas company, focused on African assets with a dual listing on the JSE and AIM. SacOil’s vision is to build a balanced hydrocarbon exploration and production portfolio using the Company’s African heritage as a competitive advantage at the point of entry where the primary strategic objective is the exploration, development and production of discovered assets, with existing or near term production, cash and revenue potential.

SacOil is focussed on oil and, where there is defined access to market, gas in proven hydrocarbon bearing basins. The Company seeks to build a portfolio of assets across the E&P spectrum from potentially “high impact” exploration to undeveloped discoveries with near term cash flow potential, and through to production with defined upside.

The Company is willing and able to operate through the exploration phase but will continue to focus on the establishment of strategic industry partnerships in order to maximise its opportunity set, manage portfolio risk and ensure that the optimum technical and operating skills are applied to each opportunity.

Consistent with this strategy, SacOil has built up an E&P portfolio including oil discoveries in Nigeria and potentially high impact exploration in the DRC as follows:

  • in Block III, through its partnership with Total, it is envisaged that the work program committed to will demonstrate prospectivity and eventually lead to oil production;
  • in relation to OPL 281, SacOil is in the process of evaluating and appraising oil discoveries through the reprocessing of seismic data with a view to drill an appraisal well; remaining conditions precedent to the farm in agreement include perfection of title and all the necessary Nigerian government and NNPC consents in relation to the licence; and
  • in OPL 233, SacOil is committed to acquiring 3D OBC seismic data, which should assist in evaluating the size of the existing oil discovery and the potential upside of the block.

JSE Sponsor

Nedbank Capital

For further information, please contact:

Nominated Adviser and Joint Broker

finnCap Limited

Matthew Robinson / Christopher Raggett

Tel: +44 (0)20 7220 0500

Joint Broker UK

First Energy Capital

Majid Shafiq / Travis Inlow

Joint Broker UK

GMP Securities Europe LLP

Nick Morgan / Chris Beltgens

Tel: +44 (0)20 7647 2800

Public Relations (South Africa)

The Riverbed Agency

Raphala Mogase

Tel: +27 (0) 11 783 7903

Public Relations (United Kingdom)

Pelham Bell Pottinger

Philip Dennis / Nick Lambert / Rollo Critchton-Stuart

Tel: +44 (0)20 7861 3232


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