Share price: 33c JSE code: SCL
HOLD PREDICTIONS ON THE MEDIUM- term future of the oil price range greatly, from as low as US$20/barrel to as much as $60/barrel.
Even pessimists forecasting $20/barrel do not believe that is sustainable for long as there will be no investment in future production.
This is a point in the cycle when bigger, blue-chip companies offer compelling value. However, there’s still a case for small companies that are able to generate cash to withstand the downturn.
SacOil has one onshore oil field in production, at Lagia in Egypt, which is funded for production of 1,000 barrels/day, and it has several other prospects in Africa. The most exciting could be its participation in a joint venture with the Public Investment Corp and Igepe, looking at bringing gas to SA from the Rovuma basin. It is also looking around for other prospects in Africa.
SacOil’s board includes executives from the local business scene — such as former Reserve Bank governor Tito Mboweni as chairman, and professional services executive Ignatius Sehoole as a nonexecutive director. CEO Thabo Kgogo and operations executive Bradley Cerff are from PetroSA, and they engage actively with media and investors.
SacOil faces other risks besides the timing of an oil price recovery. There’s litigation to recover funds in Nigeria. It remains to be seen whether SacOil can deliver Lagia and make a profit from it. If it can, it should do well when oil prices recover.