SacOil in talks to buy first producing well in Nigeria

SACOIL Holdings is in talks to buy what could be the Johannesburgbased oil and gas company’s first production asset, according to chairman Tito Mboweni.

Mboweni said on Tuesday that SacOil had “the possibility of an OML”, or oil mining lease, for a project that was in production phase in Nigeria, Africa’s top crude producer. He declined to provide more detail on the stage of negotiations or the location of the asset.

JSE- and AIM-listed SacOil has operational blocks in Malawi, Botswana and the Democratic Republic of Congo. Its shares have more than doubled over the past 12 months on the JSE.

Mboweni said Royal Dutch Shell’s sale of operations in Nigeria “is good for us” and the company was “sniffing around” for prospects in Namibia and elsewhere on the continent.

He noted that some of the company’s investors preferred oil and gas prospecting companies because of the potential for capital appreciation.

“The debate within the company is whether we’re going to stay upstream oil and gas or vertically and horizontally integrated,” he said.

SacOil was not interested in assets in South Africa, he said. Shale formations in the Karoo may hold up to 390 trillion cubic feet of natural gas and Total started to drill the country’s first deep-water well last week.

“We don’t have the capacity for that,” Mboweni said. “You could spend a lot of money and not get anything” from South African exploration.

Thabo Kgogo, a previous chief operating officer at stateowned PetroSA, took over as SacOil chief executive last month. “His plan is that he needs something small, now, that produces say about 5 000 barrels,” Mboweni said. “Something that generates cash.”

Mboweni sees SacOil rivalling the oil multinationals. “We have to be that giant panAfrican oil and gas company” that could tap the continent’s natural resources. – Bloomberg