Tetra4a owns exploration and production rights for Virginia gas project in South Africa
Renergen has signed a non-binding term sheet with the South Africa’s state-owned Central Energy Fund to sell a 10% stake in Tetra4 for ZAR1bn ($68.5m).
Tetra4a owns exploration and production rights for Virginia gas project in South Africa. The project covers 187,000ha of gas fields across Welkom, Virginia and Theunissen.
The non-binding deal follows strategic partnership between Renergen and Ivanhoe Mines, ahead of the commissioning of phase 1 development of Virginia gas project in April.
The renewable energy producer intends to use the proceeds from the transaction with Central Energy Fund to advance the phase 2 development of the gas project.
Renergen CEO Stefano Marani said: “Renergen and the CEF’s relationship goes back many years. Importantly, during this time Renergen has successfully grown Virginia in a size and scale, highlighted by the growth both of our helium and methane reserves, which have finally reached the critical mass to enjoy CEF’s involvement.
“Today’s investment commitment is a result of long-term discussions between CEF and Renergen and during this time the CEF team have been amazing to deal with and I am very pleased to be able welcome them as a major investor in our future.
“I along with the Renergen Board and management team look forward to building on the strong strategic partnership with CEF as we embark on Phase 1 operations in April and establishing Virginia as a significant domestic and global gas producer.”
The CEF investment is expected to result in providing exposure to economic participation in South Africa’s first and only onshore petroleum production right.
Also, Renergen is enabled to strengthen its strategic position as a domestic energy producer and expand its relationship with the South African government.
Closing of the transaction is subject to fulfilment of conditions, including completion of a technical, commercial, financial, legal and tax due diligence.
Also, it is subject to approvals from the Department of Minerals and Energy ministry, National Treasury, along with signing of binding agreements.
The parties have agreed to execute the binding agreements within 141 days. If they fail to execute binding contracts within time-frame, the purchase price shall be renegotiated.