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Invictus Energy, an Australia Stock Exchange (ASX) listed extractives junior exploring for oil and gas in Muzarabani, has completed a share placement with investors to raise about AU$8m exploration funding, days after completing an important agreement with the Government.

The funding will be applied towards the next phase of its exploration programme, which will see the firm drilling at least one oil and gas test well before the end of this year.

“Invictus Energy Limited, is pleased to confirm that, further to the ASX announcement on 24 March 2021, it has completed a placement to raise $8.0 million (before costs) by issuing 72 727 273 shares at $0.11 per share (Placement).

“Funds raised will go towards the upcoming 2D seismic campaign in SG 4571, basis of well design, long lead drilling items for the Mzarabani-1 exploration well, drilling rig tender preparation and general working capital,” Invictus said.

The good times are certainly rolling at Invictus Energy and its highly promising Muzarabani oil and gas exploration project, which would have far reaching implications for the Zimbabwean economy in the event of commercial discovery.

On Friday last week Invictus signed a Petroleum Exploration Development and Production Agreement (PEDPA) with the Government of Zimbabwe, at an event attended by President Mnangagwa, his deputy Vice President Constantino Chiwenga and Mines and Mining Development Minister Winston Chitando, who signed on behalf of the Government.

The PEDPA provides the framework for accelerated development of the Muzarabani oil and gas initiative, while also detailing roles and obligations of each party throughout the project lifecycle.

The PEDPA provides the Australian licence holder with the right to enter into a 25-year production licence following the exploration periods. The company is currently in the second exploration period.

The PEDPA also provides for Special Economic Zone (SEZ) status for the Muzarabani Project, which will facilitate a host of fiscal and non-fiscal incentives over the life of the project.

Additionally, the incentives include legal and financial stability, offshore banking, zero capital gains tax, tax holiday periods and 15 percent corporate rate thereafter.

President Mnangagwa said on Friday Zimbabwe’s oil and gas sector represented huge, unique and competitive investment opportunities given the significant potential for value chain linkages.

The President said the impact of the project will be felt in Mashonaland Central Province, Muzarabani and surrounding districts, as well as the wider Zimbabwe economy.

Apart from the potential for energy self-sufficiency, the President said other potential benefits of the oil and gas discovery included electricity generation, liquid petroleum, liquefied petroleum gas (LPG), fertiliser production and petro-chemicals.

Such is the significance of this development that Invictus’ shares were up more than 25 percent on Monday morning, building on recent strong gains that have seen its share price increase more than three-fold in a period of three months.

The Cabora Bassa project, which encompasses the Mzarabani prospect, is a multi-trillion cubic feet and liquids-rich conventional gas condensate target, which is potentially the largest, undrilled seismically defined structure onshore Africa.

The prospect is defined by a robust dataset acquired by French oil giant Mobil in the early 1990s that includes seismic, gravity, aeromagnetic and geochemical data.

Business Weekly

The signing of the petroleum exploration, development and production agreement with the Australian companies, is a deal with potential to make Zimbabwe one of the major oil producers if tests at Muzarabani deposits are successful.

The investor has put in a lot of time and effort to determine the likelihood of natural gas and petroleum condensates in the Cahora Bassa basin around Muzarabani in Mashonaland Central. This  is important for two reasons.

First, and most obviously, it clears the way for Invictus Energy and its majority shareholder Geo-Associates to invest another US$15 million to US$30 million to drill two test wells this year into the formations they have identified as a potential gas and oil reservoir.

Quite naturally, before they sink this sort of money into drilling 4,5km deep wells by October, they want their legal position, with both their rights and obligations, clearly spelt out. At the same time Zimbabwe is anxious to find out if the potential reserves do exist, and if they do, to ensure that they can be exploited, and is more than happy to sign the deal that meets the needs of both Zimbabwe and the exploration companies.

Invictus has already spent quite a bit of its own money, around US$3,5 million, working over the results of a seismic survey done by Mobil in the 1990s and then having its work checked by an independent consultancy. It came to a different conclusion to Mobil, reckoning that the probability of finding natural gas in exploitable quantities was worth the investment into test wells, with the possibility of finding some commercial quantities of condensates, crude oil, being a useful bonus.

The second important point to note in Friday’s signing, as President Mnangagwa was careful to state, is that Zimbabwe is more than willing to deal with serious investors and move rapidly to draft and sign off the commercial agreements. Invictus and Geo-Associates are not charities; they are companies that hope to make a fair profit from their investment.

A lot depends on whether the three domed-layers of hard strata that Invictus has discovered are in place and still trap the rotten remains of plants and animals that died in a rifted inlet of the early Indian Ocean in Cretaceous times. At the same time Zimbabwe will win, if the investment pays off, with assured energy self-sufficiency and just as importantly a source of industrial raw materials for the fertiliser industry and other new ventures.

This shows others thinking about investment in Zimbabwe that the Second Republic is going far beyond rhetoric and is prepared to welcome investors. We have already been making major investment deals with South African and Russian platinum companies, and more recently with an American gold producer, an Australian lithium company and a top Chinese steel company. Our doors are open to everyone. Previous investors have, without prompting, made it clear that they are getting a fair deal.

At the same event, President Mnangagwa stressed that Zimbabwean companies and other investors need to be prepared if the test wells produce gas and oil.

The potential quantities of gas and oil involved are useful and desirable, and will push Zimbabwe into the top ranks of oil exporters. The natural gas, which forms the bulk of the estimated reserves, can be put to use fairly quickly. Already Sable Chemicals, which is importing natural gas products to make fertilisers, has signed a preliminary deal with Invictus to run a pipeline to Kwekwe to get gas on tap and after it has extracted its products, there will be other products that can be made use of in the industrial area.

Natural gas is used increasingly to generate power, without refining, into a power station. They can be built quickly; basically all they are is a row of jet engines connected to generators with the civil works being little more than a shed to keep off the rain. So the discovery of natural gas will allow Zimbabwe to build its third large power station to complement Kariba South and the expanded Hwange coal thermal quite quickly.

The economic growth that is laid down in our national development strategy will need that third station sooner than we think. So the gas station would come just in time, as we need to look for the next station after the present expansion works at Hwange are completed.

When we talk about exports from Muzarabani we will find that we can make more money exporting electricity on the existing regional grid than laying long pipelines first. Gas stations can, incidentally, be started up quickly so we could use ours to generate the extra profits from peak power supply to our developing neighbours.

Any discovery of oil will need a longer lead time. Either we need to build a refinery as well, to convert it into fuels, or need to build a pipeline so we can ship it to a port and from there to a regional refinery. Both operations take time.

But regardless of these factors, we will be able to move a lot faster into the modern industrial world if we do find petroleum and gas near Muzarabani. So we need to keep our fingers crossed and start thinking on what such a useful discovery will mean and how we can exploit it for maximum national benefit. Those benefits go far beyond the fuel that most think about. They mean raw materials, infrastructure, jobs, wealth creation, and faster industrialisation.

As the President noted, having a major source of energy and raw materials makes the rapid development we need to see over the next decade to create our middle-income economy both easier and faster.

The Sunday Mail

INVICTUS Energy says it will invest between US$15 million and US$30 million towards drilling at least one oil and gas exploration well, likely before end of year, chairman Joe Mutizwa has said.

Speaking during the signing of the Petroleum Exploration Development and Production Agreement (PEDPA) at State House on Friday, Mr Mutizwa said there was potential to discover commercial quantities of oil and gas in the Cahora Bassa Basin.

The forward work consists of acquiring additional 2D seismic data in the licence area to provide better subsurface imaging to guide the drill targets and then drilling at least one oil and gas exploration well,” he said.

Mr Mutizwa told delegates at the launch, including President Mnangagwa, Vice President Constantino Chiwenga and Mines and Mining Development Minister Winston Chitando that Invictus has invested over US$4 million towards efforts to discover oil and gas.

Work undertaken thus far includes transcription and reprocessing of seismic data, gravity and magnetic tapes and gathering of additional geochemical data.

“The sub-surface studies integrating these data sets has revealed significant potential in the licence area, particularly the Muzarabani prospect, which has been independently estimated to contain 8,2 trillion cubic feet and 247 million barrels of conventional gas condensate (light oil and one of the largest conventional oil and gas targets globally,” Mr Mutizwa said.

The area being explored by Invictus was previously explored by Mobil in the early 1990s, stretching from Victoria Falls to the eastern border with Mozambique with Invictus being the only entity to do so since Mobil.

President Mnangagwa said Zimbabwe was excited at the prospect of successful oil and gas discovery, which will bring significant benefits that include energy self-sufficiency, employment creation, petro-chemicals and LPG gas production.

Recently Invictus in accordance with the requirements of rules for listed firms in Australia,  has  requested a trading halt of its shares, pending announcement of the PEDPA.

“The company is expecting to announce an update to the market on or prior to the commencement of trading on 29 March 2021,” Invictus said in a statement.

This comes after Invictus last week received firm commitments from new and existing shareholders and institutional investors to raise circa US$10 million for exploration, working capital and procurement of long lead equipment for test well drilling, targeted around October.

And towards the end of last year, the Australia Stock Exchange (ASX) listed firm received a non-binding offer for a farm-in agreement to the Cahorra Bassa area, encompassing the Muzarabani prospect.

The PEDPA with the Government provides the framework for progression and development of the oil and gas project, terms and rights of all parties, including each party’s entitled share of the product, assuming commercial discovery.

The PEDPA between Geo Associates, the controlling shareholder in Invictus, and the Government of Zimbabwe, was reviewed and approved by an Inter-Ministerial Committee established by the Government. The PEDPA provides the framework for progression of the Cahora Bassa (Muzarabani) project through the exploration, appraisal, development and production phases and obligations and rights of each party over the project life cycle.

Invictus said, earlier, the farm-in offer for the proposed transaction was subject to completion of further technical, legal and commercial due diligence by both parties.

Further, it was also awaiting approval and agreement by the Government and execution of binding farm out agreement(s).

Farm-in agreements are contractual arrangements common in the Australian exploration sector.

Typically, the owner of an interest in a tenement (farmor) agrees to transfer a percentage of their interest to another party (farmee) if the farmee meets specified exploration commitments or contributes a defined level of expenditure towards exploration activities.

Invictus is working on a petroleum product sharing agreement (PPSA), containing the fiscal provisions of the project.

This includes the Republic of Zimbabwe’s profit/product share, and will take effect after the commencement of the production phase of the oil/gas project.

Invictus said earlier that the PPSA was undergoing independent review, which was expected to be completed early in the first quarter this year, following which the PPSA would be finalised and executed.

Together, the PEDPA and PPSA form the Production Sharing Agreement (PSA) between Zimbabwe and Geo Associates and, Invictus said, demonstrates the Government’s commitment to implementing investor friendly reforms and promoting and protecting foreign investment.

The PSA will ensure that a predictable, stable and transparent legal and fiscal regime is put in place, that is commensurate with terms in the region, follows international best industry practice, meets the country’s aspirations and provides investors and the country with a fair share of any developed resources.

Invictus said following the completion of the field reconnaissance programme in Muzarabani and receipt of submissions from multiple vendors, the company had selected its preferred contractor to undertake a seismic acquisition campaign in 2021.

The company planned to start detailed planning post formal contract award to enable the acquisition campaign to commence after the conclusion of the rainy season.

Invictus is planning to acquire a minimum of 400km line of 2D seismic, which exceeds the work programme obligations for the current (2nd) exploration period.

Invictus Energy is an independent oil and gas exploration company focused on high impact energy resources in sub-Saharan Africa.

Its asset portfolio consists of a highly prospective 250 000 acres within the Cahora Bassa Basin in Zimbabwe.

Special Grant 4571 contains the world class multi-trillion cubic feet (TCF) Muzarabani and Msasa conventional gas-condensate prospects.

The Sunday Mail