Exploration companies can yield massive rewards if they can make an early entry into profitable regions. First movers generally secure the best acreage, best terms and the most lucrative markets. This is why the transformational success for junior explorers has come from frontier exploration.
In this backdrop, let us have a glance through the independent oil and gas explorer - Invictus Energy Limited (ASX:IVZ), dedicated on high impact energy resources in the sub-Sahara African region.
The Company recently released its results for the half-year period ending on 31 December 2019, demonstrating good progress being made at its asset portfolio- the Cabora Bassa Basin in Zimbabwe, which, in Africa, is amongst the largest under-explored interior rift basins.
Before we dive into the developments of IVZ’s Cabora Bassa Project, let us briefly understand the attributes considering which the Company chose Zimbabwe as its focus region.
Southern Africa, being desperately short of gas, is currently facing an energy crisis with increasing shortages of electricity hampering industry and investment. Majority of power in the region is coal and hydroelectric and the aging coal fired power plants are being retired.
IVZ believes that over 10k MW of power supply will be lost in next few years. This translates that a shift from gas to power has become increasingly important to the regional power needs.
Zimbabwe is a strategic location for the following reasons-
- It is relatively industrialised compared to majority of African countries with large local demand
- The region serves as the gateway and import/export corridor for Zambia, Botswana, DRC and Malawi to the port of Beira in Mozambique
- The government is pro-business, promoting foreign investment and has implemented investor friendly reforms
Now that we understand that IVZ has tapped a lucrative region, let us graze over its recent results that demonstrate the stance of its advancing Project-
Operational Update 1H20- Progressing the Development of Cabora Bassa Project
IVZ’s Project in Zimbabwe encompasses the Mzarabani Prospect, a multi-TCF conventional gas-condensate target defined by a robust dataset acquired by Mobil in the early 1990s. It is possibly the largest (undrilled) structure onshore the African region, seismically defined.
In the reporting period, IVZ was focussed on progressing the development of the Project and conducting ongoing evaluation of additional hydrocarbon projects to complement its activities.
IVZ completed the acquisition and geochemical analysis of the two primary source rock intervals in the Cabora Bassa Basin. The data correlates with basins of West Australia and few other domestic ones with oil and gas prone source rocks that charge multi- billion barrel and multi- Tcf findings. The geochemical analysis validates IVZ’s basin modelling assumptions of multiple periods of hydrocarbon generation. Below are further details:
- New outcrop samples of the Permian aged Mkanga formation revealed a solid correlation with two oil seep samples on trend (in the neighbouring Mid Zambezi sub basin).
- Analysis of the Triassic aged Alternations Member verifies good source potential for liquids and gas generation.
- Results have enhanced the confidence in the source rock presence, distribution and quality within the Basin.
- Moreover, enhanced seismic imaging has better allowed the outcrop source and reservoir sequences to be mapped (into the subsurface).
Gas Sale MoU
The reporting period welcomed IVZ’s second gas sale MoU, after Sable Chemicals. To advance gas supply for a Gas to Power plant ( ±500 MW) if there was to be a commercial gas discovery from SG 4571, The Company signed a Gas Sale MOU with Tatanga Energy.
- The plant will be built in 2 phases- initial phase evaluated at ±150MW, while the next will comprise of further ±350MW.
- Its location will be assessed by certain factors like access to transmission infrastructure and SAPP (Southern African Power Pool, which enables cross-border electricity trading between states), proposed pipeline routings.
- IVZ believes that the gas supply (of up to 100 MCF) every day for two decades is a significant volume, underpinning the advancement of any commercial gas discovery from the Project.
IVZ had total net assets worth $ 9.59 million as on 31 December 2019. Total cash at the end of the reporting period amounted to $ 2.05 million.
The stock last traded at $ 0.017 on 12 March 2020.
Currently, IVZ is progressing the farm out process of Cabora Bassa Project with companies evaluating the project in physical and virtual datarooms. This has fetched interest from a wide variety of E&P players besides Private Equity companies focused on upstream investments.
To know about IVZ’s December Quarter Results, CLICK HERE- Invictus Energy Declares December Quarter Results; Significant Progress at Cabora Bassa Project
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