Gasol PLC seeks to capitalise on acqusition and investment opportunities in the oil and gas sector with a geographic focus in the Gulf of Guinea region of West Africa and specifically on opportunities in the hydrocarbon sub-segment of liquefied natural gas.
The company have recently completed a round of corporate funding via loan notes at a significant premium to its current shareprice and look set to make advances on its plans. There could be an exciting period ahead for gasol as they look to monitise various exclusive agreements with large regional players such as AFREN PLC and AFGAS.
At todays closing mid price of 0.375p there looks to be significant upside on this unique african focused liquified natural gas company.
Gasol has entered into an exclusive Project Option Agreement ("Option Agreement") with Moni Pulo (Petroleum Development) Limited ("Moni Pulo") in respect of all of the gas in Nigerian offshore licence area, OML 114.During the exclusivity period, Gasol will have an opportunity to make a proposal to Moni Pulo regarding the development of OML 114, including exploration, development and offtake. If Moni Pulo accepts the proposal from Gasol, it is then the intention of the parties to work together to conclude definitive gas purchase agreements for development and sale of all of the gas in OML 114 to Gasol.
OML 114 is situated in shallow waters on the coast of South East Nigeria at the mouth of the Calabar River, within a locality that has a number of known gas reserves that could, subject to agreement, be used in due course to augment a Gasol project. The licence area has been drilled and surveyed since the 1990s and has gas reserves of approximately 750 billion cubic feet (approximately 107 million barrels of oil equivalent). Gasol has commissioned initial pre-feasibility reports which indicate that the available gas could support LNG production of over 800,000 tons per annum for 10 years or fuel a 500 MegaWatt power station for 20 years.This agreement represents the first step in the development of the Company's new strategy and offers Gasol the important opportunity to secure a known supply of gas for monetisation.
Gasol has negotiated a revised agreement with Sociedad Nacional de Gas, GE ("SONAGAS"), the national gas company of Equatorial Guinea, in respect of the associated gas from the Zafiro field ("Zafiro gas").
Under the terms of the amended agreement, the Zafiro gas will now be used by SONAGAS in a newly structured entity for the production of ammonia/urea based fertilizer and/or other similar gas derived products, which is being developed with international investors.
The Zafiro gas was previously being developed in order to produce LPG, condensate and lean gas for sale, with development being carried out by SONAF, a partnership jointly owned by Gasol and SONAGAS.
Gasol and SONAGAS have agreed that, as compensation for giving up the rights to the original gas project, Gasol will receive the following benefits:
§ Gasol, through SONAF, has been appointed as an agent for the purpose of developing a market in West and Central Africa for purchasers of liquefied natural gas produced by the EG LNG project;
§ Gasol has the option to invest in 5% of the equity in the new Zafiro gas project;
§ US$2.0 million of development costs incurred by SONAF on the previous project will be recoverable from the new gas project, and will be reimbursable equally between SONAGAS and Gasol. In this regard, Gasol has previously written off all of its costs relating to SONAF.
This revised agreement complements Gasol's new strategy, in particular the Company's aim to see, and be involved in, the development of a West African focussed LNG market, whilst also ensuring greater likelihood of a successful gas project based on the Zafiro gas.
Zafiro is located in the 500,000-acre Block B, 68km (42 miles) WNW of Bioko island, Equatorial Guinea, adjacent to the international border with Nigeria. Water depths range from less than 300ft to greater than 5000ft.
The Zafiro-1 discovery well was drilled in February 1995, testing at 10,400 barrels per day. Three subsequent wells showed the reservoir to be relatively shallow (around 5,000ft), and low pressure, with a bottom-hole shut-in pressure of 2,800psig.
The 268,191dwt VLCC (very large crude carrier) Swift was selected for conversion to the FPSO Zafiro Producer. The Swift was built in 1973, with an overall length of 331.5m, a breadth of 56m and a depth of 26.4m. It has a draught of 20.5m fully loaded, or 8.3m ballasted. It has a storage capacity of 1.4 million barrels. The conversion was carried out at the HAM-PMB Bechtel yard, on Pelican Island. Early reservoir evaluation indicated that a 40,000 barrels per day (b/d) rate could be expected from the planned eight wells, requiring the installation of an 80,000b/d process plant, a 40MMSCFD gas flare capacity and storage for 1.7MMBBL of oil.
These are the main shareholders of Gasol plc.
Percentage of total stock:
African Gas Development Corporation Limited - 585,897,670 - 53.03%
Afren plc - 226,421,354 - 20.49%
Synergy Asset Management Limited - 75,000,000 - 6.79%
The percentage of the Company's AIM securities that are not held in public hands is 84.89%