SacOil shares jump as it moves to profit from loss

SHARES in SacOil Holdings jumped 6,8% to 63c yesterday after the African gas and oil explorer reported a profit for the first half, from a loss previously.

SacOil, which is also listed on the Alternative Investment Market in London, reported profit of R19,1m for the six months to end- August, from a R6,9m loss in the previous corresponding period, it said in a statement.

Profit was boosted by the sale of a 60% stake in participating interest in Block III in the Albertine Basin, on the border of the Democratic Republic of Congo and Uganda, to French oil giant Total, it said. The Albertine Basin, which is part of the western arm of the East Africa Rift System, is divided into 10 exploration blocks covering thousands of square kilometres.

UK firm Tullow Oil is the lead explorer in the region after it bought stakes from Heritage Oil & Gas last year.

For the disposal of its stake in the asset, SacOil, through its Semliki Energy joint venture, received $7,5m, with further potential proceeds of $54m.

After the transaction, SacOil will still hold a 12,5% exposure to the asset, it said. “Under the terms of the farm-out, Total has committed to use all reasonable endeavours to meet the Block III work p rogramme obligations and to reach a final investment decision within three years from 31 March 2011,” the company said.

With the sale to Total and the signing of a $25m “standby equity distribution agreement”, “the company is well positioned to be able to progress its plans in Nigeria as well as look at additional options to grow its asset portfolio”, it said.

The focus of most oil and gas firms in Africa was on high- impact but sizable exploration assets, leaving numerous already discovered and relatively de- risked smaller plays for SacOil to take advantage of, the company said. These opportunities provide “potential for fast-track production and revenue, which in turn creates the foundation for future step growth”, it said.

Source: BusinessDay