Johannesburg - AltX-listed Renergen has secured the first and only local onshore petroleum right, by paying R650 million to buy of Molopo South Africa Exploration and Production.
Molopo secured the production right, over 187 000 hectares of land in the Free State, in 2012. Now Renergen has bought this asset through its acquisition of Molopo, just three months after it listed. The asset has proven reserves worth R2.2 billion.
In a statement to shareholders, chairman Brett Kimber notes the company - which used to be called Dominica Trade - sees Molopo as an “attractive renewable energy opportunity”.
Molopo is building a vertically integrated business model aimed at offering “Wellhead to tank” solutions for clients in the Free State. Windfall bought it in 2013 and developed it to its current state as part of a portfolio of assets, which include farm-in rights to two other natural gas assets in South Africa.
The company aims to provide compressed natural gas to the auto, industrial and specialised markets as well as sell liquefied helium.
Renergen says it is buying the company because it wants to “capitalise on the current undersupply of alternative and renewable energy”. It says the asset can be integrated into its value chain in South Africa and sub-Saharan Africa.
“The Molopo acquisition fits perfectly as the first viable asset for Renergen.”
It says the deal will give it “first mover advantage in the local natural gas sector”.
“Molopo’s assets have been brought up from initially an exploration asset to production status and are close to production.”
Renergen is a special purpose acquisition company focused on the alternative and renewable energy sectors in South Africa and sub-Saharan Africa.
It raised R74 million through a private placement with investors including its directors, who hold 5 percent among themselves. Mazi Capital currently owns 67.6 percent of the company, while Sanlam Investment Management and BCI Institutional Worldwide Flexible Fund own 6.8 percent each.
Kimber adds the company will achieve “another significant milestone” once Molopo starts generating revenue in the first half of 2016.
The deal, which is subject to customary conditions, will be paid for through the issue of 70 million shares and R5 million in cash.
IOL