Sacoil converts Gairloch debt in 34% equity swap

SACOIL Holdings has completed a R156.6m debt-for-equity swap with Nigeria-based infrastructure group Gairloch, as the AltX-listed oil and gas exploration company freed up its balance sheet to focus on its growth projects.

Targeting oil and gas fields in Africa, the Johannesburg firm has partnered with French oil company Total to explore in the Democratic Republic of Congo, and has partnered with a Nigerian consortium to develop two onshore blocks in the oil-rich Niger River delta region.

Yesterday the company said it had entered an agreement with Gairloch to convert its debt, in return for 489-million new ordinary shares at 32c per share — which represented a 34% indirect stake.

This will raise the number of the company’s issued shares to 1.4-billion, which was subject to the approval of SacOil’s shareholders, the JSE and London’s Alternative Investment Market, and regulatory bodies in SA.

“Gairloch is set to become a strong and long-term shareholder, who understands the region we operate in well and will support the ongoing growth of the business towards first production and beyond,” SacOil CEO Robin Vela said.

He said the company received an acknowledgment of debt for R75m from shareholder and service provider Encha Energy, relating to an agreement of a prospective acquisition. “Encha acted as an agent for one of the projects we were interested in, which subsequently fell through,” he said.

On its exploration programme, Nigeria’s National Petroleum Corporation (NNPC) approved SacOil’s programme and budget earlier this year, which includes the drilling of an exploration well, on the OPL 233 oil fields.

Mr Vela said the company was now waiting for the final approval from the NNPC for the OPL 281 oil fields near oil and gas company Chevron’s 100,000 barrels a day plant, which the company had identified as a project that has to commence production as an immediate task.

“The decision often takes time, but we are confident the decision is eminent.

“Our titles are in known production addresses which have proven oil reserves which we intend to develop in the near future,” Mr Vela said.

However, he raised concerns over the rebellion in the Democratic Republic of Congo, which had stalled its operations.

SacOil planned to finalise the environmental and social impact assessment for its exploration programme in Malawi.