Canadian oil & gas firm increases its stake in South African offshore block

Canadian oil and gas company Africa Oil Corp. has tucked the final approval under its belt for the acquisition of additional interest in a block it operates in the Orange Basin off South Africa while setting the stage for offshore exploration activities on this block. 

Africa Oil announced a legally binding letter of intent (LOI) with Azinam Limited, a wholly owned subsidiary of Eco (Atlantic) Oil & Gas, on Tuesday, July 11, 2023. The acquisition was expected to enable the firm to boost its operated working interest with an additional 6.25% in Block 3B/4B in the Orange Basin offshore South Africa. The block covers an area of 17,581 square kilometers and is on-trend with TotalEnergies’ Venus-1 and Shell’s Graff-1, La Rona, and  Jonker-1X oil discoveries.

As the final approval from the South Africa Department of Mineral Resources and Energy (DMRE) and the Petroleum Agency South Africa (PASA) has been received, Africa Oil made a payment of $2.5 million to Eco. Consequently, the Canadian player now holds an operated 26.25% interest in Block 3B/4B with Eco retaining a 20.00% interest and Ricocure (Pty) Ltd with a 53.75% interest.

An independent review of the prospective resources and probability of geological success of the exploration prospects within Block 3B/4B has reported total unrisked gross P50 prospective resources of approximately 4 billion barrels of oil equivalent with the probability of success ranging from 11% to 39% over the 24 prospects identified.

Furthermore, Africa Oil and its Block 3B/4B partners are progressing with plans to conduct a drilling campaign on the block and are in discussions with potential partners to farm out a share of their working interests. In addition, efforts are being made with an environmental consulting firm in conducting an environmental and social impact assessment process, in preparation for permitting and drilling activity on the block.

Dr Roger Tucker, Africa Oil Chief Executive Officer, commented: “I am pleased we have received final approval for the increase of our interest in Block 3B/4B. Africa Oil has a significant opportunity set in the Orange Basin, probably the most sought-after new petroleum region globally. We are excited about the large prospect inventory in Block 3B/4B; the prospects are all based on 3D seismic and are of similar age and type to the discoveries announced by Shell and TotalEnergies in the Orange Basin.”

Thanks to around 14,000 km of 2D seismic and 10,800 km² of 3D seismic over Block 3B/4B, Africa Oil has identified a large opportunity set of exploration prospects, with the majority of the prospects lying in about 1,500 m of water.

While confirming the final government approval for the farm-out of its 6.25% stake in Block 3B/4B to Africa Oil, Eco (Atlantic) Oil & Gas also provided an operational update on entering the next license phase for Orinduik block.  

Under the terms of the agreement with Africa Oil, Eco will receive a further payment of $4 million from Africa Oil upon a further farm-out to a third party into Block 3B/4B. Aside from this, when the first well is spud an additional $1.5 million will be due to the company.

Gil Holzman, Co-founder and Chief Executive Officer of Eco Atlantic, remarked: “With respect to Block 3B/4B, we are pleased to have received final approval from the South African government for our transaction with Africa Oil, which now paves the way to completing a further farm-out in respect of the block and the drilling of our identified targets of up to five wells.”

As the operator, Eco Orinduik gave notice to the Minister of Natural Resources of the Cooperative Republic of Guyana (MNR) to enter the second phase of the second renewal period of the Orinduik license effective as of January 14, 2024. This entails a commitment to drill one exploration well to the Cretaceous formation during the remainder of the license period which ends on January 13, 2026.   

Additionally, Eco advised MNR last week that TOQAP Guyana – the SPV joint entity held by TotalEnergies and QatarEnergy 60:40 – had relinquished their 25% stake for strategic reasons and will not participate in the next phase. As a result, the former TOQAP Guyana 25% interest will be assigned to Eco Guyana. Subject to the requisite government notifications, Eco will remain the operator holding a 40% stake in the Orinduik license as Eco Guyana and 60% as Eco Orinduik. 

Colin Kinley, Co-founder and Chief Operating Officer of Eco Atlantic, outlined: “Knowing the material value and potential of Orinduik Block, Eco acquired Tullow’s 60% WI and has remained focused on drilling a massive, stacked pay interval in the southeastern quadrant of the block. Eco Atlantic now approved operator intends to bring in new partners and to drill the significant potential of the Cretaceous interval on the Guyana oil fairway. 

“With this well commitment, we now move into planning and engineering preparations to drill in next 12-18 months. We feel extremely positive about the future of the Orinduik block, receiving significant interest from key industry partners and IOCs in our recently commenced farm-out process.”