News: Sunbird Energy welcomes project viability

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Transcription of Finance News Network Interview with Sunbird Energy Limited (ASX:SNY) Managing Director, Will Barker



Donna Sawyer: Hello I’m Donna Sawyer from the Finance News Network and joining me from Sunbird Energy (ASX:SNY) is Managing Director, Will Barker. Will, welcome to FNN.



Will Barker: Thanks a lot for having me today Donna.



Donna Sawyer: Let’s start by introducing Sunbird Energy. Tell me about your company and where your operations are focused?



Will Barker: Sunbird Energy is a southern African focused oil and gas explorer and developer with a range of onshore exploration projects, plus the largest offshore undeveloped gas discovery.



Donna Sawyer: The results of independent studies into the development of the Ibhubesi gas project have proven to be encouraging. What did those studies tell you about the project?



Will Barker: The independent studies have enabled us to book a maiden reserve for the Ibhubesi field and demonstrate its commercial viability. The reserves that we’ve booked are 540 Bcf of 2P proven probable reserves. That is the largest undeveloped gas discovery in South Africa and puts us in a wonderful position to be able to capitalise, on what is a very high value energy market in South Africa.



Donna Sawyer: So what happens next in terms of the development of that project?



Will Barker: Having met the major commercial milestones in the first half of the year around reserves and technical fees and commercial feasibility, our next phase is on the standard project delivery path. We’re undertaking our FEED studies, completing our approval processes as well as undertaking the gas sales agreements that will be the crystallising moment for the commercialisation of the field.



Donna Sawyer: So what does the viability of the Ibhubesi gas project mean for Sunbird Energy?



Will Barker: The viability of this project is key for us. It unlocks the value of what is a very large proven reserve base, in a market that is desperate for gas and paying a very high value for new energy.



Donna Sawyer: How are your gas marketing discussions progressing in relation to the opportunities available there?



Will Barker: We have two key gas markets that we’re developing. The first one is a replacement of their diesel peaking power in South Africa. There is a very limited existing domestic gas market, which has forced them to use very high cost diesel to meet their peaking power requirements. The existing Ankerlig power plant is a 1300 megawatt facility and its burning diesel in the order of up to 16 hours a day. We’re working to replace that diesel with gas into the turbine facility.



The other market for us that is moving in parallel is the independent power market. The Department of Energy in South Africa is undertaking a tendering process, which will see a first phase 500 megawatt power plant tendered this year. Sunbird will obviously be the leader in that with the only proven reserves in the country.



Donna Sawyer: Let’s talk about the gas market in South Africa. What are you seeing in terms of demand and how are you positioned to capitalise on that emerging market?



Will Barker: It’s been very well publicised that the South African energy market is in a significant period of shortage. They have both a under capacity in generation, as well as a structural problem with how they generate their power. It’s dominated by base load coal fired power and lacks the vital gas it needs to meet its peaking needs. What we’re doing is undertaking those negotiations that will deliver us with the sales agreement that coupled with our existing reserve base, will lead to the development of the Ibhubesi field.



Donna Sawyer: Sunbird Energy completed a placement successfully raising $5 million. Were you encouraged by the level of interest and how have you allocated those funds?



Will Barker: Yeah we were very successful and very happy in raising $5 million in March this year at 40 cents. We saw it as a great reflection of people’s belief in the project and in our ability to continue to advance it through major project milestones. The five - we still have $5 million in the bank today. That provides us with funding through to late this year, to continue to deliver major project milestones around gas sales agreement and project delivery.



Donna Sawyer: Finally Will, what milestones would you like Sunbird Energy to achieve by the end of this year?



Will Barker: Having already achieved some major milestones in the first half of this year with the reserves and our feasibility assessment, what we’ll continue to focus on is delivery of gas sales agreement, our regulatory approvals and our funding options that will carry us through into development of this field. We also have our onshore projects that continue to meet their major milestones. Booking of a maiden contingent resource across our CBM projects will further enhance the value of our portfolio.



Donna Sawyer: Will Barker, thanks for the update on Sunbird Energy.



Will Barker: Thank you very much, it’s been a pleasure.



Ends