Invictus Energy Revives Farm-In Talks and Prepares for Musuma-1 Drilling

Australia-listed Invictus Energy has resumed discussions with potential farm-in partners for its onshore Zimbabwe assets, including the Mukuyu gas-condensate discovery, after a deal with Qatar-based Al Mansour Holdings collapsed in January due to farminee demands and legal issues. The company’s sole asset is a major operating stake in exploration licenses covering nearly the entire Cabora Bassa basin. Several parties, including some from the Persian Gulf, are reviewing data, and a deal could be reached before drilling the Musuma-1 exploration well in the second half of 2024.

Musuma-1 Well: Target and Cost Efficiency

The Musuma-1 well targets 1.2 trillion cubic feet of gas and 73 million barrels of condensate. It is expected to be simpler and cheaper to drill than the Mukuyu probes, costing between $6 million and $10 million, with funds already secured. The well will take approximately 14 days to reach total depth from spud date. Cost reductions stem from improved subsurface knowledge after drilling two wells and acquiring two seismic surveys, allowing for better well design. Additionally, familiarity with local service providers and their competitive bidding, along with service companies establishing bases in neighboring Namibia, reduces mobilization times and rental costs.

Petroleum Production Sharing Agreement (PPSA) Progress

Invictus has been negotiating a legal and fiscal agreement with the Zimbabwean government to underpin a multi-decade project in the Cabora Bassa basin. Delays in signing the Petroleum Production Sharing Agreement (PPSA) are attributed to external legal counsel, not the company or government. Managing Director Scott McMillan expressed confidence the PPSA will be signed in April 2024, which would boost lender and development bank confidence to support the project.

Market Demand and Strategic Focus

The Cabora Bassa asset has gained impetus from Zimbabwe’s domestic energy shortages, exacerbated by the Iran war, and rising energy demand in southern Africa driven by a critical minerals boom. McMillan noted that gas demand has increased over the last two years, with no shortage of market for discovered gas at favorable prices. Once Musuma-1 results are in, Invictus will decide whether to focus on the basin’s eastern margin or the central fairway hosting Mukuyu, aiming to establish an early production system and build development from there.

Acquisition Plans and Financial Position

Beyond Zimbabwe, Invictus is exploring acquisitions of producing and near-producing assets to generate cash flow, with support from a major oil and gas trading company for acquisition finance. Following a successful fund-raise and investor discussions, the company’s stock price rose 48% to A$0.093 by the close of trading on Friday.