Woodside continues to keep Australian junior Pancontinental Energy guessing about its intentions surrounding a promising exploration block in Namibia’s red-hot Orange basin, no less than 16 months after securing an option to operate the acreage.
Since the Australian major unveiled its farm-in option in March 2023, Petroleum Exploration Licence (PEL) 87 has arguably become even more attractive because it lies right next door to the block housing Galp Energia’s stunning Mopane oil and gas discovery, which holds an in-place resource of 10 billion barrels of oil equivalent.
Woodside has an option to acquire a 56% stake in the licence after paying for a 6593-square kilometre 3D survey and giving Pancontinental N$27 million in cash.
The PEL 87 was awarded to a Joint Venture led by Pancontinental on 23 January 2018 for a possible total of three terms spread over eight years, plus possible extensions, and can be converted to a production licence under pre-agreed terms. Pancontinental is the operator and owns a 75 per cent interest in PEL 87, while Sintana maintains a 7.4 per cent indirect, carried interest and the National Petroleum Corporation of Namibia (Namcor) owns 10 per cent.
This licence covers a very large area of 10,970 sq km, subject to periodic relinquishments which may be waived by the government of Namibia at its discretion and Pancontinental has mapped a very large Saturn turbidite complex, with a core area of some 2,400 sq km and an overall area of about 4,000 sq km. The company believes that this very large and complex feature may host numerous large internal hydrocarbon traps, some of which have already been mapped on 2D seismic but none have been drilled.
The Chevron and Galp acreage is located immediately adjacent to licences controlled by TotalEnergies and Shell which house the big Graff, Venus, La Rona and Jonker discoveries.
If Woodside exercises its option, Pancontinental has, for a consideration of N$27 million, entered into an option agreement with Custos Investments to acquire a 1 per cent interest from Custos by paying Custos a further N$18 million. This was done to ensure the company retains at least a 20 per cent interest in the project and the option is exercisable within a similar time period as Woodside’s option. Pancontinental will retain a 20 per cent interest during the drilling of the well.
Furthermore, if the joint venture decides to drill a second well then Pancontinental may retain its 20 per cent interest but will need to pay its share of that well; reduce its interest to a 10 per cent participating interest and have Woodside carry Pancontinental through the cost of the second well; or at any time up to 60 days after the approval of any development plan, convert its interest to a 1.5 per cent gross overriding revenue royalty interest.