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Sacoil Holdings Limited - Update on Mozambique Opportunity and Withdrawal of Cautionary Announcement

                                                                          
                                                                     

Update on Mozambique Opportunity and Withdrawal of Cautionary Announcement

31 March 2014

Shareholders are referred to the cautionary announcement published on 24 February 2014 and are advised that SacOil and The Public Investment Corporation (SOC) Limited (“PIC”) have now entered into a Memorandum of Understanding (“MoU”) dated 31 March 2014 with The Instituto De Gestão Das Participações Do Estado (“IGEPE”). IGEPE is an entity that manages investment portfolios and shares on behalf of the Government of the Republic of Mozambique in commercial ventures. SacOil is a South African based independent African oil and gas company listed on the JSE and AIM (JSE: SCL / AIM: SAC).

The MoU, which builds on and replaces the relationship outlined in the Expression of Interest between the parties dated 19 February2014, is intended to regulate the relationship between the parties with regard to:

·        assuring the supply of natural gas and energy security, and opening up and growing the industrial and domestic consume rmarket for natural gas across Mozambique;

·        establishing joint venture companies to, inter alia, build an onshore natural gas central processing facility, a pipeline to link the gas fields in Mozambique with potential customers in Southern Africa (referred to as the “African Renaissance Project” or “ARP”) and to develop and grow the natural gas consumer market in South Africa and other Southern African Development Community member states for the supply and distribution of natural gas along the pipeline in Mozambique (referred to as “Gas for the People Project” or“GPP”); and

·        establishing ancillary projects such as, but not limited to, a gas-to-liquid plant and a combined cycle gas power plant.

Importantly, both the ARP and GPP are long term projects, and are subject to, amongst other matters, feasibility studies, front-end engineering design, detail engineering, market analysis, social impact studies, the conclusion of joint venture agreements by 30 July 2014 or such later date as agreed to in writing by the parties, and the raising of the funding required for the projects. The feasibility studies are subject to the approval of the boards of directors of each of the PIC and SacOil and satisfaction of any other applicable approval processes of these parties.

Further updates in this regard will be provided to SacOil shareholders as and when new developments occur.

Withdrawal of cautionary announcement

The board of SacOil has provided shareholders with all information relating to the entering of the MoU and accordingly shareholders are advised that they no longer need to exercise caution when dealing in the Company’s securities.

For further information please contact:

SacOil Holdings Limited

Roger Rees / Tariro Mudzimuirema                           +27 (0)11 575 7232

 
 

SacOil Hodings Operations Update

                                        
           

SACOILHOLDINGS LIMITED OPERATIONS UPDATE                       

10 March 2014

Satisfactory progress has been made across the existing portfolio of exploration and appraisal assets. The Company also continues to evaluate a number of opportunities to secure new value accretive acreage in established and prolific African hydrocarbon jurisdictions and basins.

Nigeria, OPL 233: 3D Seismic Data Acquisition project contractor commences mobilization process.

In preparation for the scheduled 3D Seismic Data Acquisition project, the Environmental Impact Assessment ("EIA") on the block,handled by Tidalflow Nigeria Limited, has been completed with both wet and dry season sampling carried out. While the wet season sampling has been completed and the result approved by the Department of Petroleum Resources ("DPR"), the dry season sampling is presently undergoing processing before being forwarded to the DPR. The Federal Ministry of Environment has also carried out the required site verification and EIA registration processes. Thefinal report on the Seabed Hazard Survey by Epanoe Nigeria Limited has been delivered to, and accepted by the Joint Venture Partners as well as the field's seismic data acquisition contractor, Geomarine Systems Limited, following successful completion of the work.

SacOil and its OPL 233 partners have commenced operations for the 3D Seismic Ocean Bottom Cable (OBC) survey, with mobilization ofequipment for the survey in progress.

The timeline envisages full mobilization to the site to be completed by the end of March 2014. To this extent, various equipment including the requisite gun boats and seismic recording cables have been delivered,whilst navigation equipment and seismic sensors are being air-freighted to compress the lead time to actual recording of data. Following mobilization, the 3D OBC acquisition work is expected to commence early April 2014 and be completed by the end of July 2014, subject to operational contingencies and weather related issues. Finalisation of formalities for the seismic data processing contract is ongoing.

The 3D seismic data will provide valuable subsurface information relevant for the quantification of the licence's resource potential, as well as the selection of an optimal drilling location. The Company expects the processing of the raw data and interpretation of results to be completed by Q3, 2014. SacOil holds a 20% interest in OPL 233.

Malawi, Block 1: Completion of the environmental screening study and approval of 2014 budget

In April 2013, SacOil initiated a satellite screening study associated with an environmental risk assessment for a proposed exploration program over the license area, covering approximately 16 000 sq km across northern Malawi. The study was successfully completed in December 2013.

At a meeting held in Lilongwe in December 2013, the results of the satellite study was presented to the Malawi Department of Mines and the 2014 budget and work program was also presented and approved.

With the positive results associated with the satellite environmental work, planning of the environmental and social impact assessments has now begun. In consultation with the Malawian government, SacOil is currently targeting to have all environmental work completed by Q3 2014. The company holds a 100% interest in Block 1.

Qualified Person Review

This release has been reviewed by Bradley Cerff, Vice President Operations, who is a member of the Society of Petroleum Engineers with over 15 years’ experience in petroleum exploration and management. Bradley Cerff has consented to the inclusion of the technical information in this release in the form and context in which it appears.

For further information please contact:

SacOil Holdings Limited

Roger Rees / Tariro Mudzimuirema                                   +27 (0)11575 7232