Sunbird Energy Buys Stake in Ibhubesi Gas Project Off South Africa

Southern Africa gas explorer and developer Sunbird Energy Ltd has executed an agreement to acquire a 76% interest in the 870 Bcf (2C) Ibhubesi Gas Project offshore west coast South Africa for an initial purchase price of US$1.5 million.

The acquisition, when completed, will provide Sunbird with a 76% interest in Production Right Block 2A, which covers a 5,000km2 area within the Orange Basin and contains the Ibhubesi gas discovery.

The block is located 380km north west of Cape Town and 105km off the coast of the Northern Cape Province.

Sunbird Managing Director Will Barker said: “Following the recent launch of PetroSA’s Ikhwezi Project, the Ibhubesi Gas Field is now the largest undeveloped gas discovery in South Africa. Through this acquisition and the subsequent development of the project, we are able to transform Sunbird from a gas explorer to one of the leading gas developers and producers in southern Africa.”

On completion of the transaction, which is partly subject to approval of a transfer of title from the South African Department of Mineral Resources, Sunbird will have the right to operate and develop the Ibhubesi Gas Project. Existing joint venture partner PetroSA, the national oil company of South Africa, will retain its 24% interest in the block.

The Ibhubesi Gas Field is comprised largely of a series of channel sand deposits. Reservoir depths range from 3,000 to 3,500m at average water depths up to 250m. These deposits are characterised by geometrically complex but highly productive reservoirs, with porosity ranging from 16% to 25% and permeability averaging 100 mD and up to 200 mD. Production tests conducted on the discovery wells generated flow rates averaging 22.5 MMcf/d with 351 bbl/d of condensate  from a single zone and up to a high of 72 MMcf/d with 1,450 bbl/d of condensate from a test of multiple zones, demonstrating the high productivity of the field. The gas composition of the field is high quality with no impurities requiring  treatment. The pipeline quality gas also contains valuable Liquid Petroleum Gases and condensate, with yields estimated at 20 barrels of LPG and condensate per 1 MMcf.

Development Opportunity

Standard Bank, on behalf the Block 2A JV partners, has undertaken a detailed Feasibility Study for the development of the Ibhubesi Gas-to-Power Project. The Feasibility Study is based on the development of the field to supply an 811 Megawatt (MW) gas-fired power plant. The study assessed development options, regulatory requirements, market conditions, project economics and funding options. The Feasibility Study demonstrated that the Ibhubesi Gas-to-Power Project provides a unique, economically attractive and commercially competitive source for the supply of electricity to the highly constrained electricity market along the west coast of South Africa.

[mappress]
December 24, 2012