JSE-listed SacOil has embarked on a large-scale drive to recruit seasoned “oil and gas people” for its board and executive team, CEO Robin Vela told Engineering News Online ahead of the company’s secondary listing in London on Friday.
Vela said SacOil would bolster its board with professionals, who had experience in taking oil companies up the value chain and who could offer technical expertise.
The company would arm itself with a project execution team, including a geophysicist, geologist, reservoir engineer and commercial manager that would be based in Cape Town.
Vela described SacOil as a company with an “aggressive” acquisition drive.
The Johannesburg-based firm currently holds assets in the Democratic Republic of Congo and near-term production acreage in Nigeria.
“We will keep our focus on the western rift of sub-Saharan Africa when looking for other near-term production or production assets.
“It has been a long time since Nigeria has been seen as more stable than Tunisia or Libya, but that is now the case, and this has placed additional premium on our assets,” said Vela.
He added that the higher oil price at just over $120/bl also made the company’s current assets more valuable than when it initially acquired them.
Vela believed that these assets would retain their value even in the longer term, but said it would be somewhat more expensive to acquire more assets. “I think the days of oil trading at $70/bl are long gone, and expect oil prices to trade around $90/bl to $100/bl in the medium term.”
Meanwhile, SacOil said that the secondary listing on Aim would expose the company to a bigger pool of investors, and, therefore also a broader capital base.
“To achieve our acquisition drive, we need access to capital. SacOil has been lucky enough to be supported by a number of South African institutions to date, but feel that it would be in the interest of the company and its shareholders to expand its capital base globally,” said Vela.
He added that SacOil’s board intended to attract new UK institutional investors and raise its public profile to ensure that it remained sufficiently capitalised to further develop current exploration projects and execute near-production and producing-asset oil and gas transactions in the pipeline.
The company is expected to list with a market capitalisation of £156-million or about R1,7-billion, which according to Vele would provide it with sufficient working capital for the next 12 months after listing.
Vela further believed that the Aim listing would stabilise SacOil’s current share price, which he described as “volatile” and “undervalued”.
The company’s share price peaked last month at R2,57 a share, but was trading at R1,87 a share on Tuesday. Vela said that the volatility in share prices were not based on real fundamentals, but rather driven by emotion and JSE investors being more retail driven.
But Vela believed that the listing in London would see SacOil being evaluated against a number of its peers, which would allow a real comparable pricing for its stock.
Companies are regarded as peers in terms of their stage of development, their focus on African acreage and the fact that they are pure-play upstream entities.