Petroleum Africa
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Friday, June 20, 2014
Sunbird Energy completed its acquisition of a 76% stake in Block 2A offshore South Africa, including the Ibhubesi Gas Project (IGP) from Forest Oil Corp. All required approvals have been received from the South African government which allowed the finalization of the acquisition.
Having executed the IGP Sale and Purchase Agreement (SPA) in December 2012 with Forest Oil, the company required approval under section 11 of the South African Mineral and Petroleum Resources Development Act 2002 for Sunbird to acquire its overall interest in Block 2A, which was received in October 2013. Sunbird also required verification of certain Exchange Control Approvals from the South African Treasury, which were received on June 16.
Block 2A covers a 5,000 sq km area within the Orange Basin and contains the IGP, which is South Africa’s largest undeveloped gas discovery with 2P reserves of 540 Bcf. Over $125 million has been invested in the exploration and appraisal of the block in 2000, with seven of the 11 wells drilled to date discovering commercial volumes of gas. Beyond the existing discoveries, an independent assessment determined that the block contains best estimate prospective gas resources of 7.8 Tcf.
Sunbird MD Will Barker said: “Completing the Forest Oil transaction delivers to Sunbird a highly valuable asset, with South Africa’s largest proven gas field, at a time when emergency load shedding is again in the headlines in South Africa. The South African energy market is both highly constrained and high value, creating a unique opportunity for Sunbird as the most advanced project for the supply of energy for the domestic market. We look forward to progressing our gas sales negotiations with Eskom for the supply of gas to the existing Ankerlig Power station that is currently run on expensive diesel, and further exploring Block 2A’s upside potential.”
Sunbird continues to advance the Ibhubesi Gas Project, both technically and commercially with key upcoming milestones for the IGP including:
• Negotiations with Eskom of a Heads of Agreement for gas sales to the Ankerlig Power Plant;
• Completion for the Field Development Plan and Basis of Design;
• Commencement of the Front End Engineering Design (FEED) Studies;
• Progression of Environmental approvals; and
• Advancement of the Eskom Gas Sales Agreement.
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