Canadian oil and gas exploration firm Africa Oil Corp has signed a letter of intent with Azinam Limited – a subsidiary of Eco Atlantic – for the acquisition of a 6.25% stake in Block 3B/4B in the Orange Basin offshore South Africa.
Under the terms of the agreement, Africa Oil Corp will pay Azinam Limited $10.5 million for the stake, with payments made in stages. Up to $2.5 million will be paid within a month of the signing while an additional $2.5 million will be paid following government approval of the transaction.
Africa Oil Corp says it will pay $4.0 million upon completion of a farm-out deal to a third party and will close the acquisition deal with a further $1.5 million payment once spudding of the first exploration well on the block is complete.
Once approved, the acquisition will increase Africa Oil Corp’s stake in the block to 26.25% while Azinam Limited will hold a 20% share and Ricoure Limited a 53.75% interest. Africa Oil Corp and its partners are planning to farm-out up to 55% of gross working interest in the block.
The Canadian energy firm says the acquisition forms part of the company’s efforts to expand its footprint in the promising block following an indication of the presence of commercial-scale hydrocarbon reserves of up to 4 billion barrels of oil equivalent with a recovery rate of up to 39% in over 24 prospects identified in the area.
The block’s proximity, exposure and similarity in geographical structure to the Venus, Graff, La Rona and Jonker discoveries in the Namibian side of the Orange Basin also makes it a promising region to invest in, Africa Oil Corp stated.
Africa Oil Corp and its partners have additionally selected a South African firm to conduct an Environmental and Social Impact Assessment study in preparation of a two-well drilling campaign on the 17,581 km² block.
