US$44m war chest to drive oil/gas search

Oil and gas explorer Invictus Energy, says the discovery of commercially viable quantities of petroleum deposits at its Mukuyu-1 or Baobab prospects in the north of Zimbabwe would transform the country and region’s energy security situation.

In an annual report for 2021, Invictus said its business plan was committed to being a successful part of helping to meet the dual challenge of the energy transition towards not only lowering emissions but also ensuring energy security.

The successful discovery of hydrocarbons in Murazamani and Mbire would have a profound positive impact on Zimbabwe’s exports amid growing global demand for natural gas, a cleaner of energy, as the world transitions to climate-friendly energy sources.

Exploration drilling, which started in September this year and technical evaluation of the results from the Mukuyu-1 prospect, will take up to 60 days, company officials indicated earlier.

Global natural gas consumption is expected to grow at an annual average rate of 0,8 percent from 2022 to 2025, reaching around 4,240 billion cubic metres (bcm) by the end of this forecast.

This represents a 3,4 percent increase (140 bcm) compared with 2021, the International Energy Agency (IEA) said in its quarterly Gas Market Report.

Invictus proceeded to start drilling for oil and gas after legacy data and primary data gathered from its own survey, conducted by Canadian firm Polaris in September last year, suggested strong evidence of huge potential for oil and gas in the firm’s prospective areas.

Paul Chimbodza, a director at Invictus told a media team during a tour of the firm’s Mukuyu-1 prospect in September this year that it could cost roughly US$25 million to drill the targeted two oil/gas test-wells to depths of 3,5 and 1,5 kilometres.

Invictus said it was strongly funded after the $20 million (Australian dollars) plus an additional $25 million subsequent to the decision to sole fund the drilling campaign, was raised through private placements to sophisticated and institutional investors, along with a further $3,7 million mobilised from the conversion of options during the financial year.

“The capital raises have been supported by a range of existing shareholders and new investors, placing the company in a strong position to self-fund the drilling of the Mukuyu-1 and Baobab-1 wells. A discovery at Mukuyu-1 or Baobab-1, could be transformational for not only Invictus and its shareholders, but Zimbabwe and the wider southern Africa energy market,” Invictus chairman Stuart Lake said.

This comes as Zimbabwe faces an acute shortage of power due to the advanced age of its energy generation facilities at Hwange Power Station, a 920 megawatts (MW) thermal plant, and the critically low water levels in Lake Kariba, which powers its 1050MW hydro plant.

Aging equipment at Hwange sees the plant producing less than half its rate capacity while low water levels in lake Kariba forces the power utility to produce electricity at a significantly curtailed rate. This creates a serious shortage that forces State power utility Zesa to implement power rationing across the country, which lasts several hours every day, in order to balance demand and supply.

Sometimes Zesa imports from the region, but foreign currency challenges limit the amount of power that can be wheeled in from the region, which also faces an acute shortage of the key energy commodity.

The Australia Stock Exchange (ASX) listed company has since commenced exploration drilling at its Mukuyu-1 prospect in Mbire District, in Zimbabwe’s northernmost province of Mashonaland Central.

European energy consultant ERCE estimated the gross mean recoverable conventional potential of the Mukuy-1 prospect at a combined 20 trillion cubic feet (Tcf) and 845 million barrels of conventional gas condensate, or about 4,3 billion barrels of oil equivalent (boe), on a gross mean unrisked basis.

This marks a 2,7-fold increase on the 2019 independent assessment by Getech Group plc for Mukuyu-1, with additional prospective resource estimates to follow for the Basin Margin area.

The combination of both basin centre plays, such as Mukuyu-1, and Basin Margin plays, such as Baobab, gave Invictus impetus to lay the groundwork for the basin opening two-well drilling campaign, which commenced last month.

This comes after Invictus, in December 2021, struck a memorandum of understanding with Exalo Drilling to secure the Exalo Rig 202 for the ongoing exploration campaign, after a binding contract was signed in March 2022.

A significant milestone attached to Invictus exploration programme was the expansion of the ASX-listed firm’s exploration footprint in the Cabora Bassa Basin (Mbire and Muzarabani) after an initial heads of agreement was signed in March 2022 and

ratified in August 2022 with the Sovereign Wealth Fund of Zimbabwe for further exploration rights to Exclusive Prospecting Orders 1848 and 1849.

This gave Invictus a basin master position, covering a combined acreage holding of about 360 000 hectares and encompassing the entire conventional oil and gas play fairway in the Cabora Bassa Basin.

The company has since made the commitment that even if Mukuyu-1 and Baobab do not achieve material or commercial discoveries, Invictus would not abandon Zimbabwe, but would continue the search for hydrocarbons in the prospective areas where it has already identified multiple drill-ready targets.

President Mnangagwa, speaking at the signing ceremony for the Petroleum Exploration Development and Production Agreement (PEDPA) with Invictus at State House last year, said that the agreement represented major strides in Zimbabwe’s efforts to tap into its oil and gas deposits, which is a new territory in the country’s mining sector.

The PEDPA provides the framework for progression of the Cabora Bassa Project through the exploration, appraisal, development and production phases, the obligations and rights of each party, the minimum work program obligations to maintain the licence in good standing, and the security of tenure for the project duration.

The parties will also sign a proposed Petroleum Production and Sharing Agreement (PPSA) — administered by the Ministry of Energy and Power Development , which contains the fiscal provisions of the project, including Zimbabwe’s profit/production share.

Further, apart from driving development and investment in Muzarabani and Mbire districts,Mashonaland Central Province, through Invictus’ social corporate responsibility programmes, the project will prioritise locals for most job opportunities.-herald.cl.z