Farm-in progress during the June quarter

Our 2020 Energy Pick Of The Year Invictus Energy (ASX: IVZ) just put out its June quarterly report.

The report included a brief update on progress being made on the farm-in front.

IVZ said it had “received three farm-in offers for the Cabora Bassa Project, with ongoing due diligence and internal approvals being undertaken by additional parties which may result in further bids being received”.

IVZ also confirmed that “The results of these current, and potential future, farm-in bids are subject to certain conditions precedent and further updates will be provided in due course.”

Farm-in agreements in the oil and gas sector are unique whereby they are a simple exchange of cash for a % ownership in the projects.

This means that IVZ can leave the signing of this type agreement right down to the last minute before drilling begins.

With drilling expected to commence in August, IVZ should have a few more weeks to get this deal over the line.

The positive is that there are multiple offers already on the table, so it’s more a case of ironing out the details and satisfying whatever conditions are being placed on the offers.

These type agreements need to strike the perfect balance between financial commitment from a partner and the expertise they bring to the project, so we are not surprised the process is taking a while to finalise.

We hope that whoever IVZ decides to bring on as a partner makes a significant financial contribution to the project and also has oil and gas development experience.