OilVoice - Strategy Change For White Nile

Strategy Change For White Nile

Monday, December 22, 2008

Due to certain situations beyond the control of the Board, including the fluctuating political situation in Southern Sudan and the current global economic downturn, it has not been possible, to date, to capitalise upon the initial perceived value of the Company's oil & gas portfolio. Taking into account the current economic environment, which is not conducive to the continued funding of non-producing early stage oil & gas exploration assets, combined with the current political position in Southern Sudan, White Nile Ltd decided that the Company's original strategy of concentrating on oil & gas exploration was no longer in the best interest of shareholders.

Following an extensive review of alternative strategies, White Nile identified the agricultural sector in Africa as being an area of activity which the company believe is resilient enough to generate returns on investment even in this current economic environment. Accordingly, White Nile has proposed that the Company should adopt an investing strategy to acquire or invest in businesses or projects operating in the agricultural and associated civil engineering industries in Africa. In light of this decision, the company has proposed a change of name to "Agriterra Limited". The EGM for these proposals is being held on 6th January 2009.

Oil & Gas Exploration
Until recently White Nile has been actively implementing their strategy of building an oil and gas exploration company focussing on Southern Sudan and the immediate region.

However, the clarity of title issue in Southern Sudan with regards to Block Ba was an on-going feature, with political uncertainty continuing in Sudan and the implementation of the protocols agreed on the signing of the comprehensive peace accord proving, in many cases, difficult to effect. As reported, exploration operations on Block Ba were suspended pending clarification of title. The Company had been assured by the Government of Southern Sudan (the 'GOSS') and its representatives that the original agreement signed for the development of Block Ba was valid. Subsequently, the Company was informed that if White Nile was not going to be the sole developer of Block Ba, it would be included in a consortium that would explore and develop the enlarged Block B, which would include Block Ba as well as Blocks Bb and Bc.

When a delegation of Southern Sudanese government officials, headed by His Excellency the Vice President of the Government of Southern Sudan, Dr Riek Machar, came to London in September 2007, they met with the Board, the Company's Nominated Adviser and certain shareholders, and reiterated that if White Nile was not to be the sole developer of Block Ba, the Company would receive a 22.5% interest in the aforementioned consortium put together to develop the enlarged Block B.

Notwithstanding these assurances, the confirmation of the consortium and White Nile's participation therein remains outstanding. With this ongoing uncertainty and lack of clarity regarding title to Block Ba, the Company and GOSS agreed that the GOSS' shares in White Nile, held through Nile Petroleum, the state owned oil company of Southern Sudan, should be converted into non-voting deferred shares until complete clarity of title can be given as to the Company's position within Block Ba or an acceptable position within a consortium to develop the aforementioned enlarged Block B is granted. On receipt of positive clarity, the GOSS' share holding will revert back to ordinary shares. The resolution was passed at the EGM held on 11th November 2008.

In Ethiopia, White signed a Production Sharing Agreement with the Government of Ethiopia for a 29,000 sq km block in the Southern Rift Basin in south-western Ethiopia, following a two year Joint Study Agreement with the Ethiopian Government's Petroleum Operations Department of the Ministry of Mines. A seismic operation was planned for Q4 although this has been postponed pending the completion of an Environmental Impact Study and the assessment of the direction the Company is taking.

In line with White Nile's expansion the companywe also acquired PA Energy Africa Limited ('PAEA'), a private oil company which operates in Nigeria. PAEA holds service contracts for the development of two Nigerian marginal fields: the Dawes Island Field in Oil Mining Lease 54 (OML 54) and the Tsekelewu Field in Oil Mining Lease 40 (OML 40), both carve outs under the Nigerian Government's indigenisation programme. There are currently stability issues in the area and as a result White Nile have declared force majeure which means that operations on the ground are not progressing. With a strategy shift, White Nile will be looking to dispose of these assets to a third party.

With regards to their Kenyan activities, White Nile had the right to take up a 49% stake in Block 11 in return for satisfying various spending commitments. The company have now decided that, in view of their proposed change in strategy, it is no longer prudent to carry this any further.