The Government is set to benefit from proceeds of oil and gas deposits discovered by Australian Stock Exchange (ASX) listed Invictus Energy at its Mukuyu fields in northern Zimbabwe.
This comes as the company said it was finalising the long-awaited Petroleum Production Share Agreement (PPSA) with the Government, which sets the legislative and financial framework for the nation and people of Zimbabwe to receive their fair share of benefit from developed resources is expected to be finalised.
“Recent engagement with line Minister of Energy (and Power Development), Minister of Mines (and Mining Development), and head of the Sovereign Wealth Find of Zimbabwe respectively from the Invictus board were extremely constructive, with discussions focused on early monetisation plans, and implementation of the PPSA, which is now within touching range after years of development.
Since the confirmation of a gas-condensate discovery from the Mukuyu-2 well there has been a strong commitment from the Zimbabwe Government to progress and complete the implementation of the PPSA. Invictus said the PPSA would provide a stable and transparent legal and fiscal framework across the life of the Cabora Bassa Project and it is anticipated to deliver several additional large international parties with the necessary confidence to progress additional proposals on farm-in and alternative financing options for the company.
Production sharing agreements or production sharing contracts are a common type of contract signed between a government and a resource extraction company concerning how much of the resource extracted from the country each will receive.
Proceeds received by the Government on behalf of the ordinary citizens are used to finance critical public expenditure programmes such as road, dam, and school construction.
“In addition to advancing the PPSA, Invictus was pleased to update its Memorandum of Understanding (MoU) with Mbuyu Energy for the sale and supply of gas to power a 500 megawatts (MW) gas-to-power project,” said Invictus.
Once developed and expanded to full capacity, the plant will be able to generate up to 1000MW with demand for an estimated 1,4 trillion cubic feet of natural gas. Power generation will support further integration of renewable energy sources into the National Grid and Southern Africa Power Pool (SAPP).
Now, in conjunction with the well test design work, Invictus is currently evaluating well services contract bids for the well testing and future exploration and appraisal drilling campaigns.
This comes as the exploration junior finished the year 2023 by declaring dual discoveries during its Mukuyu drilling campaign, in what the group said was a transformative year for the company and its shareholders.
“Our discoveries and results to date set an important scene for Invictus to commercialise the Mukuyu field in the future, with several key initiatives to achieve this objective advancing on multiple fronts,” he said in an update.
The discoveries in the Upper and Lower Angwa gas zones involved the drilling of 3 360 million wellbores and recovery of 15 gas and liquid hydrocarbon samples to the surface. This marked a major milestone for the company, transforming Mukuyu from a prospect to a proven gas-condensate field. Wireline logging calculates a preliminary net pay of 35 million cubic feet and subsequent analysis of gas condensate samples recovered from Mukuyu reveals an ultrahigh quality natural gas composition with negligible impurity.
“Consistent with our geological modelling, this means gas produced from Mukuyu would require minimal processing and provides a very real pathway to asset commercialisation,” said the company.
Meanwhile, Invictus has indicated its upcoming working program includes a well test at Mukuyu-2, preparation for 3D seismic over the Mukuyu gas field and preparing long lead items for a new high impact exploration well, the location of which will be determined following full interpretation of the acquired CB23 infill seismic survey program.
Unfolding activity will be supported by the ongoing support of new and existing investors, with Invictus Energy successfully raising approximately AU$16,5 million since last December through a Private Placement and Share Purchase Plan.
“The unwavering commitment from our stakeholders continually fuels our team’s drive to expand our resource and continue delivering accretive value to shareholders.
“Finally, in recognition of results secured by the Invictus team to date with support from contractors and a range of other stakeholders and the tireless effort and dedication of our team, Mukuyu was recognised by Wood Mackenzie as the second largest discovery in sub-Saharan Africa,” said Invictus.
While Wood Mac estimated Mukuyu to be 230 million boe resource, Invictus is upbeat through its future work program at Mukuyu and many exploration targets in the Cabora Bassa basin that they will significantly increase this figure, and ultimately value for shareholders and the company.
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