Africa Energy has bought an effective 10% stake in Namibia’s Petroleum Exploration Licence (PEL) 37, from Australia’s Pancontinental Oil & Gas. Announcing the move on September 13, Toronto-listed Africa Energy said it paid US$2.2 million on closing and that it would pay another US$5.5 million on the spud of a first exploration well, with various commercial conditions.
The company had proposed a similar deal, in November 2016, but cancelled it in March, citing due diligence which “identified discrepancies in respect of certain agreed commercial terms of the farm-out transaction”.
Africa Energy, in 2016, agreed to US$1.7 million on closing and US$4.8 million on spudding of the first well, for a 10% stake in the Namibian licence. The price, therefore, has gone up from US$6.5 million to US$7.7 million.
“We are pleased to partner with Pancontinental for an effective 10% interest in PEL 37 offshore Namibia. This transaction completes the discussions we began some time ago and demonstrates our commitment to this oil-prone play,” Africa Energy's president and CEO, Garrett Soden, said last week. “We look forward to the exploration well that may be drilled as early as next year.”
Africa Energy is accomplishing the deal via the purchase of a one-third stake in Pancontinental’s local subsidiary. This unit holds a 30% stake in the offshore licence.
Pancontinental’s CEO, John Begg, said the deal was an “important milestone” for the company. “The transaction implies a value for our effective 20% retained interest in PEL 37, well in excess of our market capitalisation leading up to this announcement.”
The official went on to note that it demonstrated “the large oil potential that international companies see in our Namibian acreage”. While the company has focused on opportunities in Africa, including a non-commercial oil discovery off Kenya, it has recently diversified, taking a stake in a gas play in California.
In the first statement on the block, in November, Africa Energy said the block held a number of slop fan prospects, overlying Aptian-age source rock.
Tullow Oil, the operator of PEL 37, farmed down a 30% stake to ONGC Videsh in July. As a result, Tullow has a 35% stake and local company Paragon Oil & Gas Group has 30% and Paragon Oil & Gas has 5%.