Woodside eyes offshore acreage close to Shell and TotalEnergies’ discoveries in Namibia
Woodside Energy (GOM), a wholly owned subsidiary of Australia’s Woodside Energy Group, has entered into an option deed with Pancontinental’s wholly owned subsidiary, Pancontinental Orange, enabling it to get an exclusive option to acquire a stake in a licence offshore Namibia close to oil discoveries made by Shell and TotalEnergies.
Based on the terms of the deal, Pancontinental has granted Woodside an exclusive option to acquire a 56 per cent participating interest in PEL 87 in consideration for Woodside paying for a 3D seismic survey, covering an area of at least 5,000 square kilometres within the licence area at an estimated cost of $35 million and also paying Pancontinental $1.5 million.
The ASX-listed Pancontinental explains that Woodside will have a period of at least 180 days after the delivery of the seismic survey data to exercise this option. If the Australian giant exercises the option, the two players agreed to enter into a farm-out agreement, whereby Woodside will carry the existing joint venture during the drilling of the first exploration well to be drilled in the licence area after the completion of the seismic survey.
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. The Minister of Mines and Energy granted a second, one-year extension of the initial exploration period for PEL 87 in December 2022.
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.
Moreover, very good oil source, reservoir and sealing rocks have been identified regionally, and now proven by recent discoveries, thus, Pancontinental and Woodside plan to undertake a 3D seismic survey over Saturn in partnership with Namibian partners Custos and Namcor, to define targets for drilling. Saturn is on-trend to recent major oil discoveries made in 2022 by TotalEnergies’s Venus-1 and Shell’s Graff-1.
In addition, La Rona-1 and Shell’s recent Jonker-1 (2023) discoveries have proven a working light oil system offshore Namibia. TotalEnergies is in the process of starting a multi-well appraisal and exploration drilling programme on, and nearby, the Venus discovery while Chevron announced an entry in 2022 to the PEL 90 project – about 5,000 sq km – adjacent to Pancontinental’s PEL 87 area.
If Woodside exercises its option, Pancontinental has, for a consideration of $1.5 million, entered into an option agreement with Custos Investments to acquire a 1 per cent interest from Custos by paying Custos a further $1 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.
Barry Rushworth, Pancontinental’s Director, commented: “Energy giants are jockeying for position after major oil discoveries by Shell and Total offshore Namibia. Multi-well drilling recently re-started on these discoveries with Shell’s Jonker-1 discovery and Total is reported to be bringing in two deepwater rigs for drilling on, and nearby Venus. On-trend, Pancontinental’s PEL 87 has very high potential, with contiguous geology to the discoveries. Woodside has the exclusive option to join Pancontinental and partners Custos and Namcor in exploring the huge Saturn turbidite complex mapped by Pancontinental in PEL 87.
“Exploration is moving ahead quickly, with 3D seismic acquisition planned to start later in March this year. Saturn has been independently assessed to have multi-billion-barrel potential, as first reported by Pancontinental in September 2018. The deal with Woodside is a very good one for both Pancontinental and Woodside. The planned 3D survey covers a large area over Saturn and we expect very interesting results mid-2023.”
Upon Woodside’s election to exercise its option, the Australian player will pay Pancontinental approximately $2.5 million, of which around $1.5 million is reimbursement of a portion of the firm’s past costs. Regarding the 3D seismic survey planning, this is well advanced for the minimum 5,000 sq km 3D seismic survey to be operated by Pancontinental under an agreement in which Woodside will fully fund the survey and will act as an adviser to Pancontinental. The survey has now kicked off.
“Saturn is similar to Total’s huge Venus oil discovery. They are interpreted to have the same age reservoir rocks and similar depositional character, the same mature oil source rocks and the same regional sealing rocks at about the same depth below the sea floor. PEL 87 and Saturn need further exploration, including drilling, to prove any commercial viability. Pancontinental is an ASX listed energy company with a large strategic position in this major, emerging energy play alongside Shell, Total, Chevron, and Qatar Energy,” added Rushworth.
Activity to ramp up off Namibia in coming months
In a separate statement, Sintana Energy confirmed the deal between Woodside and Pancontinental, adding that the fast-track processed results for the seismic survey were expected in late June 2023, while Robert Bose, President and Director of Sintana, stated: “We are pleased to confirm further progress on attracting capital and world-class partners to our portfolio of assets in the Orange Basin.
“The success in executing our strategy speaks to the quality of our portfolio and the continuing emergence of the Orange Basin as the world’s next great hydrocarbon province. We expect significant additional activity on our blocks and on those around us over the next 12 to 18 months that will further demonstrate the scale, scope and potential of our portfolio.”
Knowledge Katti, Chairman and CEO of Custos and Director of Sintana, said: “The transaction strengthens the positioning of both Custos and Sintana in Namibia. Specifically in an area that has emerged as the exploration hot-spot in recent years, particularly after the recent discoveries by Total Energies and Shell.
“We are excited to make further progress with Woodside on Block 2713. The block has been previously mapped with good quality technical data and the new survey will enable us and our co-venture partners to mature these exciting prospects for drilling.”