AUSTRALIAN Securities Exchange-listed Invictus Energy has raised an additional US$17 million to fund the drilling of Mukuyu 1 and Baobab 1 exploration wells at its Muzarabani-Mbire site, a company official has said.
NYASHA CHINGONO
Invictus, which is set to spend in excess of US$100 million in its exploration for oil and gas in Zimbabwe’s Cabora Bassa Basin, announced this week that it will solely fund the project as it inches towards exploration.
“Australia’s Invictus Energy (ASX: IVZ) has made the decision to sole fund its potentially play-opening exploration campaign in Zimbabwe’s Cabora Bassa Basin. The company announced today it has successfully raised A$25 million (US$17 million) through a Private Placement, which means it is fully funded to drill the Mukuyu 1 and Baobab 1 exploration wells,” senior media adviser Josh Lewis said.
Invictus will sink its first exploratory well, Mukuyu 1, a 3.5 kilometre hole, in early September, with officials saying exploration will take eight weeks, after which a shallower well, Baobab 1, is set for drilling at a cost of US$10 million.
The company admitted during a media tour last week that the costs of such an undertaking are set to escalate as the project takes shape. So far, US$16 million has been sunk into primary exploration that includes hiring the drilling rig and logistics.
Another US$16 million will be gobbled up by drilling Mukuyu 1, according to Paul Chimbodza, the managing director of the Australian company’s local subsidiary, Geo Associates.
According to Invictus, drilling at Mukuyu 1 will begin in early September and is expected to take eight weeks. In a new discovery, the company said 4.3 billion barrels of oil are being targeted for exploration.
“Mukuyu is one of the largest oil and gas prospects to be drilled anywhere in the world this year, targeting an estimated 4.3 billion barrels of oil equivalent,” Lewis said. “Baobab is a shallower and potentially more liquid prone target, which displays similarities to the prolific East Africa Rift ‘String of Pearls’ play. The Exalo Rig 202 is already in place at Mukuyu 1 and final preparations are underway to commence drilling in early September.”
Invictus recently entered into a production sharing agreement with the Zimbabwean government, which allows the company to recoup costs before sharing profits with the host government.
This will allow the company to recover, while the government may choose to benefit from either resource or cash. In terms of the Mines and Minerals Act, anyone extracting a mineral pays a royalty to government.
The royalty differs with what you are mining.
“The oil and gas sector works with what we call a production sharing agreement. The host country where there is oil and gas is saying these resources belong to the host country. You will do that at your own cost. In exploration there are two results, either the result is positive or you count your losses,” Chimbodza said.
“They say we allow you to explore, with your own money, if you have a commercial discovery we will allow you to recoup and what is left on the table, you share with the government of Zimbabwe. That is what the production sharing agreement is saying.”
