IVZ Coverage - MergerMarkets

Good story about IVZ in today's MergerMarkets daily summary. They don't substantiate their source, but it's a good read (with splashes of new info about potential farm-out structures).

8. Invictus Energy eyes 1Q19 farmout of Zimbabwe gas and oil field

Invictus Energy [ASX:IVZ], will launch a 1Q19 farmout process to sell down its interest in the Mzarabani prospect in Zimbabwe in exchange for funding further exploration drilling, Managing Director Scott Macmillan said.

The level of equity sold in the project will depend on the type of partner that invests and the results of the ongoing data reprocessing, Macmillan said. Whether the company sells down operator level equity in the asset will also depend on the type of interest received, he added.

Mzarabani, which sits within the Cabara Bassa Basin, will be developed as a classic onshore oil and gas condensate project, he said, where costs per well sit at around USD 10m. It hopes to drill more than one well, he added.

The company has yet to mandate advisers for the transaction, but is working with G-tech regarding the ongoing reprocessing of seismic data.

Invictus will likely work with a UK or Europe-based boutique, Macmillan said. It would welcome approaches and has recently been in London meeting potential advisers, he added.

Cabora Bassa contains 3.9tcf and 181mmbbl of gross mean unrisked potential resource, according to an independent report by Netherland, Sewell and Associates, Inc. (NSAI), Macmillan said. Cabara is the largest undrilled structure in onshore Africa, he added. Invictus has an 80% stake in the SG 4571 licence that contains the Mzarabani prospect, alongside a local partner, he said.

The company is expecting interest for the regionally active majors and large independents, he said.

Invictus has strong government support, with president Mnangagwa publicly endorsing the company as a beacon for renewed foreign investment into the country, Macmillan said.

There is significant local gas and fuel demand, and there are a number of potential routes to market for the gas and condensate, he said, and the company has been in discussions with potential local industrial offtake partners.

Zimbabwe has excellent infrastructure, and the field is but two hours’ drive on a tarmacked road to the capital Harare, Macmillan said. The field could also be quickly developed as a gas-to-power project, he said.

Furthermore, Zimbabwe is connected to the Southern African Power Pool, he added, which means the power can be exported to a number of countries in the region, including South Africa. Invictus, which is listed in Australia, has a market cap of AUD 18m (USD 13m).

Source: Proprietary Intelligence

Size: < 50m (USD)

Value: 10m USD (well cost approx)

Stake Value: more than 30% inclusive

Grade: Confirmed

Alert: Australia M&A Intelligence