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Jun 18, 2003

PetroSA plans to sell 9% of Sable lease to BEE

© Reuse this South Africa’s national oil company, PetroSA, yesterday announced its intention to sell a 9% stake in its Sable Mining Lease project to a black economic empowerment (BEE) partner – a deal it aims to conclude before the end of the year.

The 9% share, said to be worth between $12-million and $14-million, is intended for a group or consortia in the rural areas of the country, with a bias towards economically poorer provinces, such as the Eastern Cape, Limpopo, Kwazulu-Natal and the Western Cape.

PetroSA maintains that this is not a financially-driven deal and the successful bidder would not necessarily be the highest one, but one that is most representative in terms of the country’s broad based BEE strategy.

In 1998, the company, through a joint participating agreement with Pioneer Natural Resources, established the Sable Mining Lease, a field located 135 km southwest of Mossel Bay.

PetroSA was appointed operator of the lease and holds a 60% working interest in the field, while the remaining 40% is held by Dallas-based Pioneer.

“In line with our BEE strategy, PetroSA obtained the unilateral right to transfer 9% of the Sable Mining Lease interest, held by PetroSA, to a South African company,” said Modise Ramahala, GM: corporate services of PetroSA.

The company is looking at facilitating funding for the successful bidder, as well as at assisting the bidder with participation in the project.

Sable is estimated to have recoverable reserves in the region of 18-million to 25-million barrels of oil, with initial peak rate production of 30 000 to 40 000 barrels of oil a day. The expected life of the project is three to five years.

PetroSA announced that it has, through a competitive tender process, appointed transaction advisors for the sale. The advisors include EY Corporate Finance, African Harvest Capital and Deneys Reitz Attorneys.

The transaction advisors are to manage the tender, as well as the conclusion of all necessary documentation pertaining to the transaction.

The deal seeks to include broad based groups of historically-disadvantaged individuals (HDI), as well as HDIs who have not materially benefited from current empowerment initiatives, including rural communities, nongovernmental organisations, cooperatives, youth and disabled people.

A national public awareness campaign, which will include presentations by the transaction advisors and PetroSA executives, is set to begin at the end of June. The campaign will include further details of the Sable investment opportunity and the proposed transaction price.

PetroSA is targeting October 17 as the date for the announcement of preferred bidders and production at the field is due to start at the end of the year.
Edited by: Martin Czernowalow
© Reuse this Comment Guidelines (150 word limit)
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