Yemisi Izuora
Africa Oil Corp. has announced the completion of Africa Oil SA Corp.’s (AOSAC) strategic farm down agreement with TotalEnergies EP South Africa S.A.S. and QatarEnergy International E&P LLC. for the Orange Basin Block 3B/4B, offshore South Africa, announced on March 6, 2024.
The AOSAC is a wholly-owned subsidiary of Africa Oil and retains a direct 17.00 per cent interest in Block 3B/4B and transferred the operatorship of the block to TotalEnergies.
Africa Oil under the transaction retains a maximum value of up to $46.8 million to Africa Oil and will receive, subject to achieving certain milestones defined in the Agreement, staged cash payments for a total cash payment of $10.0 million of which $3.3 million is now due, and the remaining balance in two successive payments conditional upon achievement of key operational and regulatory milestones.
Africa Oil will also receive a full carry of its 17.00 per cent retained share of all JV costs, up to a cap, repayable to TotalEnergies and QatarEnergy from production in case of exploration success and development, which is expected to be adequate to fund the Company’s share of drilling for up to two wells on the licence.
Under a separate agreement between Africa Oil, AOSAC, Eco (Atlantic) Oil & Gas Limited (Eco) and Eco’s subsidiary, Azinam Limited signed in July 2024, AOSAC will acquire an additional 1.00 per cent in Block 3B/4B from Azinam subject to the satisfaction of customary conditions precedent, including approvals from the government of South Africa.
In his comments, Africa Oil Chief Executive Officer, Dr Roger Tucker, says: “Africa Oil has an unrivalled position amongst its Independent E&P peer group in the world-class Orange Basin. This includes our interest in the Venus discovery and the follow-on appraisal and exploration upside on Block 2913B, offshore Namibia. This farm down with TotalEnergies and QatarEnergy, two companies with deep geological knowledge of the basin, will facilitate exploration activities on Block 3B/4B, and extends our near-term scope for testing significant upside potential in our portfolio.”
The Block 3B/4B covers an area of 17,581 km2 within the Orange Basin offshore South Africa in water depths ranging between 300m and 2,500m. This block lies to the southeast and on trend with number of oil discoveries including the Venus discovery. There is approximately 14,000 km2 of 2D seismic and 10,800 km2 of 3D seismic over Block 3B/4B and a large opportunity set of exploration prospects has been identified.
The AOSAC has a 17.00 per cent interest in Block 3B/4B (26.25 per cent prior to completion of the Agreement) with TotalEnergies holding a 33.00 per cent operated interest; QatarEnergy holding 24.00 per cent, Ricocure (Proprietary) Ltd holding 19.75 per cent, and Azinam holding 6.25 per cent.
On the completion of the Eco Agreement, which is subject to the satisfaction of customary conditions precedent, including approvals from the government of South Africa, the interests in Block 3B/4B will be comprised of: 18.00 per cent held by AOSAC; 33.00 per cent held by TotalEnergies; 24.00 per cent held by QatarEnergy; 19.75 per cent held by Ricocure; and 5.25 per cent held by Azinam.
In July 2024, Africa Oil and AOSAC signed the Eco Agreement with Azinam, pursuant to which Azinam has agreed to sell and assign a 1.00 per cent interest in Block 3B/4B to AOSAC in exchange for the cancellation of all common shares in Eco and warrants over Eco common shares held by Africa Oil.
The Company holds 54,941,744 Eco shares and 4,864,865 in Eco warrants, combined constituting approximately 16 per cent of the total securities in Eco and also constituting the entire security holding of Africa Oil in Eco. Through its current shareholding in Eco, Africa Oil has an indirect 0.93 per cent interest in Block 3B/4B.