Africa Oil closes Sh5bn equity sale to IFC for Kenya operations

Money Markets

Ngamia 3 oil exploration site in Nakukulas village, Turkana. PHOTO | FILE 

By GEOFFREY IRUNGU

Africa Oil, Tullow Oil partner in exploration, has closed a Sh5 billion equity sale to the International Finance Corporation (IFC).

The deal, which was first announced mid last month, puts the oil company in a position to fund the oil and gas exploration, appraisal and development activities.

“Africa Oil is pleased to announce that it closed the $50 million (Sh5 billion) non-brokered private placement previously announced on August 18,” said chief executive Keith C. Hill in a statement released Tuesday.

Mr Hill said the IFC – which also lends cash to the private sector – would hold a 6.83 per cent stake following the finalisation of the transaction.

“Net proceeds of the private placement will be used to fund the company’s oil and gas exploration, appraisal and development activities, and general working capital requirements, primarily aimed at advancing the appraisal and development of the South Lokichar Basin in Blocks 10BB and 13T,” said Mr Hill.

The World Bank’s private-financing arm secured stake in a private placement by the oil firm that has been looking for resources for further exploration in Kenya.

The Africa Oil CEO said the Toronto Stock Exchange in Canada (TSX) – where the firm is based – had approved the private placement. The new shares will be admitted to trading on the Nasdaq Stockholm in Sweden.

The shares given to the IFC will, however, not be sold or disposed of on the TSX in Canada until January 1, 2016, the statement said.
Africa Oil has assets in Kenya and Ethiopia. It is listed on the TSX and on Nasdaq Stockholm.

Several companies have been on the cash-hunting trail this year as they seek to expand exploration and appraisal activities following several oil discoveries in northern Kenya. It is estimated that Kenya so far has found a billion barrels of crude oil.