Independent oil & gas exploration company, Invictus Energy Ltd (ASX:IVZ) is the first mover in the Cabora Bassa Basin in Zimbabwe, one of the largest under-explored interior rift basins in Africa. The Company has been successful in tapping the early entry advantage by securing the best acreage, best terms and most lucrative markets.
The SG 4571 exploration licence in the Cabora Bassa Basin contains potentially the largest, seismically defined, undrilled structure onshore Africa, with 8.2 Tcf + 249 million bbls of conventional gas-condensate in Mzarabani Prospect alone.
The Company is progressing the Cabora Bassa Project and recently provided an update on its activities for the quarter ended 31 December 2019.
December 2019 Quarterly Activities
In the December quarter, IVZ’s focus was on making substantial progress in its 80% owned and operated Special Grant 4571 licence of the Project and successfully advancing the Project’s status.
Source rocks from surface outcrop to the west of the SG 4571 licence area were collected in July 2019 for analysis. In the December quarter, IVZ announced the results of new geochemical analysis of these source rocks and affirmed the presence of at least two source rock facies in the Basin. The source rock facies are present in the Mkanga Formation and Angwa Alternations Member.
Moreover, the source rock analysis correlates with data from other African and West Australian Basins and suggests affinity with oil and gas prone source rocks discovered elsewhere in the world. The Company also affirmed the potential of the source rock to generate significant quantities of hydrocarbons.
Importantly, the correlation of the source rocks to active seeps provides a favourable view of the timing of generation and expulsion of hydrocarbons in the Basin besides the fact that the source rocks are capable of present-day generation deeper in the Basin.
To know more about the geochemical analysis, PLEASE READ- Invictus Energy Advancing Well At the Cabora Bassa Basin in Zimbabwe
MoU with Tatanga Energy
Marking the second MoU pertaining to the project, IVZ signed a non-binding MoU with Tatanga Energy (Private) Limited to progress gas supply for a ±500 megawatt Gas to Power plant. It has already signed a gas sale MoU with its industry partner and sole manufacturer of agriculture grade ammonium nitrate fertiliser in Zimbabwe, Sable Chemical Industries Ltd.
Under the second and recent MoU with Tatanga, both companies would collaborate and cooperate to investigate the economic and commercial viability of supplying natural gas from the Project to the proposed Gas to Power Plant, due to be sold to the national grid and/or captive clients in Zambia, Zimbabwe and Mozambique.
To know more about the MoU with Tatanga, PLEASE READ- Invictus Signs Second Gas Sales MoU for Cabora Bassa Project, Tatanga Energy to Develop 500MW Gas to Power Project
Completion of EIA Survey
In the December quarter, IVZ completed the Environmental Impact Assessment (EIA) study. The draft was prepared in December after the Scientific and Industrial Research and Development Centre completed its fieldwork and comprehensive study.
In January, final submissions from national museums, parks and monuments along with the Zimbabwe National Water Authority were received. In the coming days, the full EIA report will be submitted to the EMA for approval.
Completion of Placement
IVZ successfully completed a well-supported placement of $1.5 million via the issuance of 57,692,310 shares. The funds raised will be used to advance the Cabora Bassa Project and also support the EIA study, consultations and report. Moreover, proceeds will be directed towards the EMP fee and licence ground rental fees and commencement of preparatory works for the on-ground exploration phase.
At the end of the quarter, IVZ had cash and cash equivalents worth $2,057k.
Farm Out Process in Progress
IVZ, which aims to select a partner to participate in the high impact basin opening well, progressed the farm out process in this regard. It is evaluating the project in physical and virtual datarooms with several companies, mostly E&P ones and private equity players, focused on upstream investments.
The opportunity has passed the technical evaluation stage for several companies with commercial evaluation stage attained. Moreover, an additional number of companies are currently evaluating the opportunity post the success of IVZ’s presentation in the Africa Oil Week.
Production Sharing Agreement Negotiations with Republic of Zimbabwe
Another highlight of the quarter for IVZ was the beginning of negotiations to implement a new petroleum regulatory framework in the form of a Production Sharing Agreement (PSA) with the Republic of Zimbabwe. PSA is a more progressive agreement and provides a formulation to share the product/profit. It will ensure a predictable, stable and transparent legal and fiscal regime in place.
In a press conference held in November 2019, Hon. Minister of Mines and Mining Development Winston Chitando announced that formal negotiations had commenced. IVZ has been working along with the Ministry of Mines and Mining Development and the Ministry of Energy to advance the regulatory framework required to implement the PSA.
IVZ last traded on 30 January 2020 at $0.025.
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