Posted on :Wednesday , 4th November 2015

Toronto listed junior Octant Energy Corp (CVE:OEL) has revealed its done a deal with the administrators ofAfren to buy oil and gas assets in Kenya and Tanzania.

It is acquiring two blocks in Kenya – L17/L18 and Block 1- and one asset, the Tanga Block, in Southern Tanzania.

The Canadian company says the acquisition is important for the development of the assets, as it sees them being taken on by a team with extensive regional knowledge

Octant is run by the former Black Marlin boss Richard Schmitt, who is already familiar with the assets as they were part of the business he sold to Afren back in 2010.

Afren paid US$101mln for Black Marlin in 2010.

Whilst the financial details of the proposed transaction have not been disclosed it is likely that the acquisition value will be see a significant discount, given that they’re being picked up in an administrator’s fire sale.

The assets have seen considerable investment since Afren acquired them in 2010, with 3D seismic shot across the acreage. Whilst some data interpretation may be required, to all intents and purposes the acreage is “drill ready”.

An injection will be required to take the assets forward – Octant’s most recent accounts show the company had just shy of US$1mln at the end of August – though given the team’s strong track record in East Africa the company is expected to find supportive backers.

As well as the Black Marlin success, Schmitt was formerly president of Africa Oil where he played a key role in building what has become a significant portfolio of assets in the region.

Schmitt, in a statement, said: “I am encouraged to be working with assets I know well from my past experiences.

“This portfolio that Octant has secured is pivotal in the future development of Kenya and Tanzania as they further movement towards energy security and domestic growth in the countries.

“For me, being a part of East African growth and development again is a great opportunity and privilege.”

Octant’s proposed transaction is conditional upon the securing of customary approvals, and once those approvals are in place it expects to complete the acquisition within 7 days.

The company added that it is currently evaluating its future capital requirements and it will provide an update in due course.