DVCF Jack-Up Barge Fund

PROSPECTUS OF THE JACK-UP BARGE FUND

STATEMENT OF RESPONSIBILITY

The Prospectus is prepared to provide information on the merits and risks associated with investment in the Jack-up Barge Fund currently being issued for the purpose of providing long term funds for the acquisition of two Jack-up Barges.

Offer for subscription to the Fund is made to select individuals who in respect thereof are expected to consider and respond to the offer. No other unauthorised representation in any form by any other persons is acceptable. Projected returns are based on best opinion estimates Financial Advisers and operators in the oil and gas sector. The Fund is not intended to be listed on any Stock Exchange.

The Directors of the Fund Manager collectively and individually accept full responsibility for the accuracy of the information given and confirm, having made reasonable enquiries that to the best of their knowledge and belief, there are no material facts the omission of which would make any statement contained herein misleading or untrue. The Fund sponsors reserve the right to amend the information contained herein in line with evolving developments.

SUMMARY OF THE FUND

Fund Manager/Issuer/Sponsor DVCF Oil & Gas Plc

Trustees to the Fund Legal Department of DVCF Oil & Gas Plc

The Offer It is a Fund designed to pool funds together from investors for the acquisition of a Jack-up Barge to be deployed in the oil and gas sector.

Nature of the Fund The Fund has a tenor of six year life. It is a close ended specialised Fund designed specifically for a investment in a Jack-up Barge acquisition for a joint venture operations of Multi-national Oil Companies (MOCs) and Nigerian National Petroleum Corporation (NNPC).

Target Investors High net worth individuals and institutional investors, Trustees, Cooperative Societies and others within and outside Nigeria.

Minimum Subscription 87,000 units at $1.0 per unit or N10,179,000

Payment In full on application.

Cashflow Projections The net cashflow available to investors at the termination of the Fund is projected at N22,000,0000 cumulatively.

Guaranteed Yield Investors are guaranteed a minimum yield of 30% per annum.

Board qualification A board of the Fund shall be constituted on completion of the offer and is qualified by minimum subscription of $174,000 (N20,358,000)

Other incentives Investors in the Fund shall automatically qualify as shareholders of the special purpose vehicle, Zukus Energy Services Limited on liquidation of the Fund. The Company shall in due course seek for quotation of the Nigerian Stock Exchange.

Redemption Redemptions on the Fund can be made not earlier than three years from the first year, and on exit the investment shall be redeemed at the net asset value of the preceding year.

Status The units of the Fund are not intended to be listed on the Nigerian Stock Exchange. This prospectus and the units on offer have not been filed with the Securities and Exchange Commission (SEC).

Opening date Monday, September 1, 2008-08-26

Closing date Friday, October 3, 2008

THE FUND

The DVCF Jack-up Barge Fund is designed to pool investible fund from select investors for the acquisition of two Jack-up Barges for provision of logistics and other services to platform operations in the oil and gas sector.

Constitution of the Fund

The DVCF Jack-up Barge Fund is constituted into 6,050,600 units of $1.0 each at par, and secured by a Trust Deed in favour of the Legal Department of DVCF Oil & Gas Plc, the Fund Managers. The Fund is being offered for subscription in units of 87,000 and in multiples of 8,700 units thereafter.

Rationale for the Jack-up Barge Fund

The Fund is structured on the strength of a favourable local content policy of the Nigerian oil and gas sector with a budget of $12 billion in the current year, and the growing demand of oil in the global market.

Global Oil Outlook

The oil industry will continue to attract huge investments in the face of growing demand for oil and oil related products and services. Global demand for oil in 2008 is estimated at 88.0 million barrels per day. This shows a growth of about 2.7 per cent relative to 85.7 million barrels per day demand for 2007. The 2007 figure shows a modest 1-percent increase over the 84.9 million barrels consumed daily in 2006. In 2005 a total of 53 million barrels were consumed on daily basis.

It is estimated that total world demand for oil will hit 101.1 million barrels per day by 2015 if the 2% annual growth rate in demand is sustained. The implication is that there will be a corresponding quantum increase in investments in the sector over the period. Industry operators are accordingly raising their budgets in response to the challenge of expanding oil supply fast enough to keep up with the growth in demand.

An analysis of the global demand shows that the United States continued unchallenged as the world’s single largest oil-consuming nation in 2007, using almost one fourth of the global total at a rate of 20.7 million barrels daily. Demand growth is highest in Asia, particularly in China and India (each with a population in excess of 1 billion) and to a lesser extent in Africa (0.8 billion) and South America (0.35 billion). Where high demand growth exists it is primarily due to rapidly rising consumer demand for transportation via cars and trucks powered with internal combustion engines.

The Nigerian Local Content Policy

The Jack-up Barge Fund is designed to leverage on the supportive policy of government through the local content window. A total of $12 billion is budgeted to drive the Nigerian Oil Sector Local Content Policy in the current year 2008. The objective is to stimulate the development of indigenous capabilities in the sector. It emphasises indigenous participation in the exploration, development, exploitation, transportation, marketing and sale of the country’s vast oil and gas resources. It is targeted that the policy will attain 70% achievement rate by 2010.

Local Content Budget

The oil producing companies in Nigeria have in the past few years responded more positively to the drive of the government to achieve increased participation of indigenous companies in the oil and gas sector. This response is shown in the progressive growth of their local content budgets which has shot up by 100% over the last four years from $6.4 billion in 2004 to $12 billion in 2008.

	2002 US$bn	2003 US$bn	2004 US$bn
Chevron	0.765	1.515	2.063
Exxon Mobil	0.900	1.313	1.538
Shell	1.200	1.448	1.500
Agip	0.520	0.713	.750
Elf	0.150	0.338	0.563
Total	3.53	5.327	6.414

SUMMARY OF CASH FLOW

Yr 1

USD ($)

Yr 2

USD ($)

Yr 3

USD ($)

Yr 4

USD ($)

Yr 5

USD ($)

Yr 6

USD ($)

Total Cash inflow

16,300,600

9,000,000

Total cash outflow

15,112,100

2,236,400

2,256,400

Net Cashflow

1,188,500

6,763,600

6,743,600

Opening Balance

245,474

1,350,906

3,304,376

9,597,976

15,891,576

Operating cashflow available for debt servicing

1,188,500

7009,074

8,094,506

10,047,976

16,341,576

22,635,176

Lease Rental Repayment (Bank)

868,026

5,208,168

4,340,130

Manager/Operator fee

75,000

450,000

Cashflow Available to the Fund Investors

245,474

1,350,906

3,304,376

9,597,976

15,891,576

22,185,176

Return on Investment (%)

4.06

22.33

54.61

158.63

262.64

366.66

The estimate of cash flow available for distribution to the investors is $22 million. It is expected that a residual value of $1.8 million shall be realised under a buy-back arrangement with the Manager Operator. This will enhance the total returns to $24 million when realised. The Jack-up Barge Fund is designed to achieve significant returns on investment estimated at 397% over a period of 6 years. This gives an average return of about 66.1% when annualised.

The Fund manager/Sponsor

DVCF Oil & Gas Plc (DVCF) was incorporated as a private limited company on September, 2005 and was re-registered as a public company on June 8, 2006. The company has been engaged in project management and funding support to qualifying companies in the oil and gas sector.

The company has authorised share capital of N1.0 billion out of which N291 million has been issued and fully paid up. The total assets under joint conduct of operation is over N120 billion to date.

The services provided by the DVCF is predicated on the twin policies of local content and cabotage laws that have clearly defined the activities in the oil & gas sector reserved for the indigenous contractors. This category ranges from front end engineering design, procurement, fabrication/construction and coastal marine services to EPC contracts.

Project management and funding in support of local content constitute the major service offerings of DVCF. This is encapsulated under the following key sub-items. Project Management, Funding/Financial Advisory Services, Consultancy Services, Venture Capital Advisory Services/Structured Finance and Business Strategy.

Profile of DVCF Structured Funds

DVCF has considerable strength and expertise in structuring and managing specialised project related funds. Some of the existing funds sponsored and managed by the company include:

Scheme	Size (Nbn)	Target returns (%)	Nature/Life of Fund
DVCF Oil & Gas Fund	1.0	26 pa	Open-ended/Running
Waste Management Fund	0.468 ($4.0m)	341	Close-ended/4yrs
Jack-up Barge Fund	0.707 ($6.25m)	397	Close-ended/6yrs

Profile of Zukus Industries Limited – The Manager/Operator

Zukus Energy Services Limited is a special purpose vehicle jointly sponsored by DVCF Oil Gas Plc and Zukus Industries Ltd (ZIL). ZIL is the Co-manager/Operator of the Jack-up Barge. The company was incorporated on November 6, 1987. Its principal activities include oil and gas services, marine services, technical and environmental services as well as Waste Management. The company maintains good working realationships with major oil producing companies that includes Shell Petroleum, ChevronTexaco, Mobil Unlimited, Nigeria Agip Oil Company, NNPC/PPMC, etc.

ZIL operations covers slickline services, specifications of wireline equipment, bottom hole pressure/temperature service, corrosion services, and tank farm/depot maintenance services. The company has its main office in Warri with branches in Lagos, Port Harcourt, Eket, and in the United States of America.

Risk and Risk Mitigants

Political activists have matured over the level of extended political unrest as the courts have provided alternative and high integrity alternatives to resolving matters.

We believe that the tribunals are available to manage and smoothen the rough edges in the event of such issues arising. The tempo of activities in the Nigeria Stock Exchange after the elections is a strong indicator of the evolving stability and confidence in the political structure.

Currency Risks

DVCF is involved in maritime logistics and transportation and could be exposed to volatile exchange risk in the face of declining domestic economic growth. This is mitigated by the settlement of transaction deals with 80% dollar denominated currency units by multilateral oil Companies with records of stability and growth. Most importantly the naira has held firm under a stable exchange regime in the last four years.

Environmental Risks

Our operations are not directly linked to any safety, health and environmental hazards. In our dealings with third parties, this could become an issue. In that respect DVCF subscribes to the safety, Health environment and quality standards applicable to the sector.

BASIS AND ASSUMPTIONS ON THE SIX YEARS PROFIT FORECAST

BASIS

1. The profit forecast has been prepared on a basis consistent with the accounting policies normally adopted by the fund manager.

ASSUMPTIONS

The rental income from the vessel is at the rate of $12,500 per day. An average of 30 days per month is used. In the first year of operation, rental income is not expected until the last two months.

Management fees and other incomes will be recognised on accrual basis.

The interest expense of $1,750,000 (25% of $7,000,000) in the first year will be capitalised .

Depreciation is calculated on a straight line basis at the rate of 2%.

The fund manager is committed in line with the investment objective to distribute 95% of the annual profit to investors.

The Jack-up badge fund is designed to achieve regular income with stable growth in line with the expected performance of the target sector.

It is a close ended trust fund designed to pool fund together from the investors and targeted at the oil and gas sector.

Transactions in foreign currencies will be converted to Naira at the rates of exchange ruling at the dates of the transaction. Any difference arising from conversion will be dealt with in the profit and loss account.

There will be no drastic change in the political and economic environment that will adversely affect the target sector in which the equipments will be used.

There will be no material changes in government regulations especially CBN regulations affecting labour costs and operating expenses that will adversely affect the forecasts made in this document.

The fund manager shall continue to maintain stable and competent management staff and the quality of the company’s management.

Government pronouncements in the industry generally and on the national minimum wage will not materially affect the industry’s operations as a whole, labour costs and operating expenses projected in the forecast.

Profit Forecast: Click Here

GENERAL CASH FLOW ASSUMPTIONS:

(1) FIXED CAPITAL- EQUIPMENT

a. Jack Up Barges:

The cost of acquisition based on the asking price is USD6,600,000 for No. 2 Nos Barges. The barges will be acquired in the 1^st month

b. Refurbishing and Certification:

This will be done strictly with the United States standards in respect of Safety of Seamen on Board (SASOB), United States Coast Guard (USCG) and American and British standard (ABS) estimate at USD 2,000,000. Refurbishing and certificat