Sunbird to Acquire Stake in Ibhubesi Proj.
Sunbird Energy Ltd. has executed an agreement to acquire a 76 percent interest in the 870 Bcf (2C) Ibhubesi Gas Project offshore west coast South Africa for an initial purchase price of $1.5 million.
The acquisition, when completed, will provide Sunbird with a 76 percent interest in Production Right Block 2A, which covers a 1,931-square mile (5,000-square kilometer) area within the Orange Basin and contains the Ibhubesi gas discovery. The block is located 236 miles (380 kilometers) north west of Cape Town and 65 miles (105 kilometers) off the coast of the Northern Cape Province.
Sunbird Managing Director Will Barker said: "Following the recent launch of PetroSA's Ikhwezi Project, the Ibhubesi Gas Field is now the largest undeveloped gas discovery in South Africa. Through this acquisition and the subsequent development of the project, we are able to transform Sunbird from a gas explorer to one of the leading gas developers and producers in southern Africa."
On completion of the transaction, which is partly subject to approval of a transfer of title from the South African Department of Mineral Resources, Sunbird will have the right to operate and develop the Ibhubesi Gas Project. Existing joint venture partner PetroSA, the national oil company of South Africa, will retain its 24 percent interest in the block.
Beyond the initial $1.5m paid, the following additional enhancement payments have also been agreed with the vendors, conditional on Sunbird achieving project milestones and commercial development success:
- $1 million payable upon Ministerial approval of transfer of title
- $5 million payable on execution of a Gas Sales Agreement
- $10 million on Final Investment Decision or First Gas Sales
- Sales Enhancement Fee equal to 1 percent of net gas sales revenues
The gas field has been explored and appraised over the past 14 years. Since 1998 eight wells have been drilled and undergone production testing, together with the acquisition of 726 square miles (1,880 square kilometers) of 3D seismic.
Complements Existing Sunbird Operations
The Ibhubesi Gas Project provides a strategic fit with Sunbird's business strategy to supply gas to the under-supplied and high-value energy market within South Africa. Sunbird's management team has a strong track record for the development of large scale gas developments.
Sunbird's existing joint venture partner in South Africa, Umbono Capital, will also provide a key role in the advancement of the project. Umbono's combination of technical skill, experience with the South African regulatory system, government relations and industry contacts will be valuable to achieving project milestones in a timely manner.
Mr. Barker said: "With approximately AUD $6 million in cash reserves prior to the acquisition and no additional work commitments on Block 2A, Sunbird remains well funded to complete the existing core hole drilling program at its Mopane Project and to advance it to pilot production drilling in 2013."
"This has enabled the Ibhubesi acquisition to be funded out of Sunbird's existing cash on hand."
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