IVZ signs landmark agreement with Zimbabwe. Drilling in the coming months.

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 13,409,766 IVZ Shares and 7,837,234 IVZ Options and the company’s staff own 1,260,417 IVZ Options at the time of publishing this article. The Company has been engaged by IVZ to share our commentary on the progress of our Investment in IVZ over time. This information is general in nature about a speculative investment and does not constitute personal advice. It does not consider your objectives, financial situation, or needs. Any forward-looking statements are uncertain and not a guaranteed outcome.

There it is...

With the stroke of a few pens overnight, Invictus Energy (ASX:IVZ) has effectively just opened up the entire oil and gas industry in Zimbabwe.

It’s been years in the making.

IVZ made two hydrocarbon discoveries in 2022 and 2023, in one of the last unexplored basins in Africa, the 5.5 billion barrel equivalent (gross mean unrisked estimate) Cabora Bassa Basin in Zimbabwe.

(and is drilling a third exploration well in the coming months, the first one in two years)

IVZ delivered Zimbabwe's first ever oil and gas discovery.

One big thing missing here though was an agreement with the Republic of Zimbabwe on how any future oil & gas production revenues would be shared.

Until the early hours of this morning...

IVZ now officially has its Petroleum Production Sharing Agreement (PPSA) signed with the Republic of Zimbabwe.

The PPSA sets the precedent for oil and gas investment in the country.

Think of it like how Woodside made an oil and gas discovery in WA in 1971 (the North Rankin gas field on the North West Shelf) and then took 8 years negotiating with the Australian and WA government on how the development would be shared - the State Agreement was finally signed on 27 November 1979 - the rest is history.

(Woodside was ~$5M market cap at the time... its ~$58BN today. The past performance of Woodside is not an indicator of the future performance of IVZ.)

Of course it's a bit early to be calling IVZ the “Woodside of Zimbabwe”, but the origin stories so far are looking pretty similar.

First oil & gas discovery in a country/state. Take years to negotiate and sign a sharing deal with the state. Develop the discovery.

IVZ has already made the first ever oil & gas discoveries, and today negotiated and signed the first ever production sharing agreement with the Republic of Zimbabwe - so it's a MAJOR milestone.

(and like the primordial Woodside in the 70s, this one also took a long time).

The agreement signed overnight covers the legal, fiscal and operational framework of building an oil and gas development in Zimbabwe.

An agreement like this includes how a country and oil & gas companies divide up the ownership, share of profits and taxes with the sovereign state.

There’s non-fiscal incentives in this too - stuff like ‘Special Project Status’ and ‘Special Economic Zone’ - which should speed up permitting and development for IVZ.

These kinds of agreements provide long term certainty for all stakeholders, and improve investor confidence in the country (and the company).

It’s a major milestone for both Zimbabwe and IVZ, here are the headlines from the last 8 hours:

(source)(source)(source)(source)

IVZ is the only company right now holding a PPSA with the Republic of Zimbabwe.

Because as we said above, IVZ made Zimbabwe's first-ever (and currently only) oil and gas discovery.

And about to drill a new exploration well in the basin in the coming months.

As the 80% owner of a giant block, IVZ is exploring and developing what is one of Africa's largest and last untested frontier rift basins.

IVZ has now “unlocked” the project (from a regulatory perspective), with IVZ holding the keys to anyone wanting a piece of a potential 5.5 billion barrel oil equivalent prospective resource estimate.

(plus this oil & gas doesn’t have to pass through the Strait of Hormuz to get to China. Just saying...)

The milestone agreement is now signed, sealed and delivered a few months ahead of IVZ’s next big exploration well.

(source)

Opening up a whole country's oil and gas sector is almost unheard of in ASX small cap land - usually the supermajors like Chevron and Exxon do that and then a gaggle of small caps follow them in.

So we’ll be tuning into the IVZ’s MD talk through the feeling in this morning's webinar at 11:30AM AEST:

Click here to register for the webinar

In the webinar we hope to hear about:

• (open with some deserved high fiving about the signed PPSA)
• What the PPSA means for IVZ developing the project into production
• Details on the spud date and objectives of the Musuma-1 well
• Any details on IVZ’s mysterious plan revealed by IVZ on new potential new opportunities in Africa (with acquisition finance support from a “major oil & gas trading company”)

This little quote from the most recent IVZ quarterly still lives rent free in our heads:

(source)

A signed PPSA brings the fiscal and regulatory certainty required by “big oil & gas money” to invest - think oil & gas super majors and national oil companies.

On the other side of the coin, IVZ already has arguably one of the biggest retail followings on the ASX.

(until recently, either dormant or angry - various levels of emotional states)

IVZ achieved rare meme-stock status around 2021 to 2023, generating thousands of online posts and many memes while it drilled its first two wells.

(and traded as high as ~40c)

When IVZ is drilling, its supporter base gets active and engaged.

When IVZ took a couple of years off from drilling, the base became either dormant or angry - various levels of emotional states.

We have a theory that a former “meme-stock” can re-active the high levels of interest if they start executing on the original plan - read the full thesis here

We think the signing of the PPSA and long awaited third drill in the coming months is just the trigger needed to re-activate IVZ’s base:

(source: The reactivation thesis: When meme stocks re-awaken)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

We explain the re-activation thesis more later in today’s note.

So what exactly is a PPSA and why is today such a big moment for IVZ and Zimbabwe?

Because the PPSA outlines how any discoveries IVZ makes gets shared between IVZ, its partners, and the Zimbabwe Government.

(Things like royalties, taxes, equity, profit share, etc)

The type of stuff that we don't really think about at the exploration stage.

Because there isn’t even a pie to slice up yet.

But becomes VERY important post a discovery.

We now have a pie, so who gets which slice?

And giant oil companies that might farm-in to this pie and fund all the extraction, processing and export infrastructure required to export the pies' contents need certainty of what % of the pie revenue they own before committing pie development money.

(probably stretched the pie analogy to its breaking point there, but you get where we’re going)

This occupies a big part of the brains running the supermajors - $858BN Exxon, $508BN Chevron, etc. (cough cough - the Qatari govt)

We mentioned it earlier, BUT IVZ’s story is starting to remind us of the $58BN Woodside origin story 50 years ago (back then it was capped at like $5M).

They had a giant frontier basin off the coast of Western Australia, a working hydrocarbon system proven by the Scott Reef-1 discovery, and...

NO fiscal framework, no path to development, and no buyer in sight.

It took years grinding out agreements with the Federal and WA governments and now the North West Shelf is one of the largest LNG projects in the world and Woodside is capped at $58BN.

Sound familiar?

IVZ has:

• A giant frontier basin - Africa's largest and last untested frontier rift basins.
• A working hydrocarbon system (the Mukuyu discovery made last year).
• fiscal framework part of the problem is solved. And now the

(We’re not saying IVZ is going to become the next Woodside - but today’s news is pretty big).

We think finally, now there is clear air for IVZ’s high impact exploration well (in H2 2026) to take centre stage.

IF another 1.2 tcf of gas plus 73 million barrels of oil (prospective resource estimate) target comes in and IVZ makes a discovery.

It will unlock a whole new play fairway and this time it will happen without any questions around “when PPSA” or “IVZ can’t even commercialise this” etc etc.

(source)

We think today's news will bring a different class of eyeballs to IVZ’s next well.

We are talking the big corporates who just saw IVZ de-risk its project from a regulatory perspective (usually the first thing these big companies want certainty around) before committing billions into a country.

This wouldn’t be the first time a supermajor’s come into this part of the world either - let's not forget IVZ’s block was once owned by Mobil (now Exxon Mobil).

Mobil spent over US$30M (back in the early 90’s, the equivalent of very close to A$100M in today’s dollars when adjusted for inflation:

(source - presentation when Invictus announced the acquisition)

They did all the hard work (seisimic, gravity, aeromag’s and geochem’s) then walked away when they saw heaps of gas and not oil.

How times have changed now - all of the big boys are trying to distance themselves from oil and are going after big gas targets now.

So much so they are willing to spend hundreds of millions on big offshore targets...

(Transition hydrocarbon - gas powered AI data centres, low carbon emission energy source etc etc... there is a push by the supermajors to bring gas into their portfolios).

Now the run-up to this year's well can officially begin - let the “meme-stock” re-activation begin

IVZ’s always done well in the lead-up and into drilling (always happens when targets are genuinely massive in oil and gas).

IVZ’s share price went from ~20c to ~40c (without a PPSA) the first time around it went from drilling confirmed to drill rig spinning:

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

We expect our “re-activation” thesis to really get going now.

(You can read about our re-activation theory in detail here: The reactivation thesis: When meme stocks awaken)

Basically our theory is that when companies build up a following big enough and become “meme stocks” - they have an army of investors engaged enough for the company’s share price to do great when things are going well and bad when things go wrong or get boring.

In summary, a meme stock:

• Lives rent free in many people's heads.
• People check for announcements regularly from the company (even though they may not admit it).
• Company starts doing something exciting again.
• Past investors come back just in case “it actually happens” this time.

AND if the company actually delivers something material - there are enough eyeballs on the stock to re-rate the stock to a level to reflect the company’s new progress.

And the cycle continues.

It’s important to note this is a thesis, and there’s no exact concrete formula or science behind market moves.

At least this time around we will see no more PPSA posts...

(source)(source)(source)(source)

And hopefully more of these instead:

(source)(source)(source)(source)(source)(source)(source)(source)(source)(source)

(amazing to see one reddit user get an apology Meme out to Scott already)

(source)

Now it's over to IVZ to drill its well this year so we can see what happens to its share price this time around (with a PPSA signed):

(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

Small cap O&G explorers share prices tend to run up into drill campaigns (IF oil & gas prices are high). Here's why.

We’ve talked about this a lot in the past - a pattern we've watched play out over and over in small cap oil & gas exploration stocks drilling high impact exploration wells.

The share price runs BEFORE the drill result.

Sometimes 2x. Sometimes 5x. Sometimes more. All in anticipation. No results on the table yet.

(Over the past couple of years while oil & gas sentiment sucked, this hasn't played out as much, but oil & gas sentiment is much better this year)

Why this happens

1. Investors accumulate in advance. In the weeks and months before a well spuds, forums light up, punters front-run the binary event.
2. News flow stacks. Rig contract signed. Rig mobilised. Permits granted. Final location confirmed. Each announcement is an incremental data point that primes expectations.
3. Imagination prices the upside. The market gets to dream about what a monster discovery could look like without the hard data to argue against it. Every "maybe" becomes a bid.
4. Commodity macro lines up. When oil & gas is already on the market's radar (like right now), the pre-drill run is stronger. We think we are in one of those windows.

In frontier O&G, the rumour can last 6+ months, and then any "sell the news" part depends entirely on the result.

IVZ has done it before

In the run up to Mukuyu-1 in 2022, IVZ went from ~20c to almost 40c on anticipation alone.

We bought into a placement at 23c in September 2022.

(we are still holding a lot of those 23c shares...)

By the time the rig was on location and spud was imminent, IVZ was trading well above 30c:

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

The last 2 years have been a different phase.

No drilling.

The Qatar deal falling over.

Oil and gas macro in the graveyard.

IVZ’s share price drifted lower and lower.

But we think the markets are slowly shifting back into a position where it creates a pre-drill run-up:

A pre-drill run, which we think needs three ingredients:

1. Visible drill progress (rig contract, mobilisation, firm spud date)
2. Macro cooperation (O&G on the market's radar)
3. A credible timeline (a drill within the next 6 months)

For IVZ right now, all three things are lining up pretty nicely.

If this pattern holds, IVZ’s share price can start to build up some momentuminto:

• Rig contract’s being signed
• Rig mobilsing to the drill pad.
• Firm spud date
• First zones tested during drilling

None of those are the final drilling results, just the anticipation to them.

They are pre-result catalysts and each one can re-rate IVZ’s share price in its own right.

(to be clear: "tend to" is not "always". Plenty of small cap O&G stocks drill with no pre-drill run and have to rely on a genuine discovery to move. This is a pattern, not a law.)

Also, usually we say to top slice and take some profit before the result, we did NOT follow our own rules for Mukuyu-2 results and held everything into the result.

A quick reminder on what IVZ has already

For anyone new to the story, here's the quick refresher.

IVZ's project sits in one of the last untested frontier rift basins in Africa.

The Cabora Bassa Basin in Zimbabwe.

The project has a gross unrisked mean prospective resource of ~5.5 billion barrels of oil equivalent (estimate).

(source)

Up until a few years ago, the project had never been drilled.

In September 2022, IVZ started drilling its first well, Mukuyu-1, and by December had "opened up the system" by defining a working hydrocarbon system.

In 2023, IVZ followed it up with Mukuyu-2, which delivered an official gas-condensate discovery.

From the Mukuyu drill campaigns, IVZ confirmed:

• ✅ Gas readings 135x above background levels
• ✅ Multiple potential gas-bearing reservoir units (up to 13 in the Mukuyu-1 sidetrack)
• ✅ ~900m gross interval, with 225m in potential hydrocarbon-bearing zones (upper Angwa target)
• ✅ Multiple seals identified with several hundred-metre thicknesses above the deeper primary targets
• ✅ Elevated fluorescence, indicating condensate or light oil
• ✅ Commercial helium grades up to 0.1% (helium is a valuable by-product)
• A working conventional hydrocarbon system declared 🛢️ ✅
• An official gas-condensate discovery on Mukuyu-2 ✅

IVZ’s Mukuyu discovery was published by Wood Mackenzie as the second-largest discovery in Sub-Saharan Africa for 2023.

The first four companies in the image below are $326BN capped Shell, $270BN capped Total and then little old IVZ...

Source: IVZ Secures Gas Sample From Major Discovery (March 2024)

The discovery in 2022 happened while Liquefied Natural Gas & oil prices were running - then as prices fell away, so did IVZ’s share price (despite that Mukuyu-2 well delivering a discovery again).

Then IVZ went into a bit of a newsflow vacuum, and with that lack of activity (drilling), IVZ’s share price fell away even more.

Now... oil and gas prices have just started a leg up again...

Oil prices are close to those 2022 levels (and threatening a run much higher).

AND Liquefied Natural Gas prices look like they are breaking out...

The right macro setup for IVZ to have just locked in its PPSA AND heading into its 2026 well...

Over to IVZ to deliver now over the next few months.

(source)(source)(source)

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

What we want to see next from IVZ

IVZ’s next well (Musuma-1)

Now its all about the countdown to IVZ’s next well - the 1.2 Tcf gas + 73M barrels of condensate target.

IVZ expects to be drilling in the second half of this year.

Here are the milestones we will be tracking:

• 🔄 Rig mobilisation to site
• 🔲 Drilling starts
• 🔲 Drilling updates
• 🔲 Drilling results

What could go wrong

The key risk in the short-term is “delay risk”.

There is always a remote possibility that the drilling program slips into 2027 or that it gets missed entirely.

The macro environment could change, and it may lead to a delayed drill program - in which case IVZ’s share price could suffer.

Delay risks.

IVZ has been "about to drill" multiple times. If Musuma-1 slips into 2027, the market loses patience.

Source: “What could go wrong” - IVZ Investment Memo 21 April 2026

Other risks

Like any early-stage exploration company, IVZ carries significant risk.

Here, we aim to identify a few more risks.

While previous wells confirmed a working hydrocarbon system, frontier exploration is statistically difficult, and there is no guarantee the upcoming Musuma-1 well will hit commercial quantities.

A failure at this specific target would likely lead to a sharp decline in the share price as the market reassesses the basin's potential.

Despite the recent $10M capital raise, deep frontier drilling is incredibly expensive and operational delays are common in the industry.

Any unforeseen technical issues could exhaust the current cash balance, leading to further dilutive capital raises that would reduce the value of existing holdings.

Investors should consider these risks carefully and seek professional advice tailored to their personal circumstances before investing.

Our IVZ Investment Memo

You can read our IVZ Investment Memo in the link below.

We use this memo to track the progress of all our Investments over time.

Our IVZ Investment Memo covers:

• What does IVZ do?
• The macro theme for IVZ
• Our IVZ Big Bet
• What we want to see IVZ achieve
• Why we are Invested in IVZ
• The key risks to our Investment Thesis
• Our Investment Plan