IVZ updates its Gas Sales MOU

Our portfolio company, Invictus Energy (ASX: IVZ), just put out an update on its oil & gas project in Zimbabwe.

Just a few weeks ago IVZ declared its basin opening discovery.

Then last week it followed up with a second discovery.

(Source)

Now, IVZ is turning its attention to development activities on the project…

On the development front, we got two different announcements today:

1. An update on the company’s Mukuyu-2 well - where IVZ has finished wireline logging and is now preparing to run a 7 inch liner ahead of a flow test planned in 2024.
2. A gas sales MOU for up to ~1.4 trillion cubic feet of gas - The MOU being a precursor for a Long Term Gas Sale Agreement.

Here are some of our key takeaways from both announcements:

1. IVZ keeps finding fluorescence in its drill cuttings - this was from ~3,173.3m depth, fluorescence is typically a good sign the interval contains more oil and gas.

2. IVZ has optionality with the Mukuyu-2 well - meaning IVZ can go back in and flow test the two primary reservoirs it has declared a discovery from AND it can go back and test the lower sections where the drill rig was finding over pressured gas.

3. Gas sales MOU is with Tatanga Energy - Tatanga are looking to build a 500mw gas to power project which would be supplied by IVZ. Tatanga is already developing 3 renewable energy projects in Zimbabwe right now with its flagship project being a 400 MW solar power project.

4. IVZ’s project location gives it domestic and export optionality - IVZ’s project sits ~100km of 3 major interconnectors to the Southern Africa Power Pool (SAPP) grid. That means IVZ has optionality when it comes to development being able to sell it domestically in Zimbabwe and export their gas to other countries in the region.

5. Key terms for the MOU are flexible - IVZ has optionality when it comes to selling its gas, it can choose to sell to Tatanga as well as other customers AND can look to fast-track a small scale 50MW pilot plant if the two parties agree. We think this would come after IVZ’s flow test in 2024.

What’s next for IVZ?

• Production liner to be run - IVZ will now run a 7 inch production liner so that it can be flow tested in 2024.
• Analyse data and plan next move - IVZ can then decide where to go next - there are so many prospects and targets to go after in the basin
• Flow test in 2024 - This is when we can start to get an idea of what a development pathway looks like.