A last-minute burst of interest by multiple supermajors in a sought-after exploration block in South Africa’s sector of the prolific Orange basin will delay the conclusion of a farm-out process.
Block 3B/4B — an asset that could host 4 billion barrels of recoverable resources — is operated by Stockholm-listed independent Africa Oil, which together with its two partners are keen to farm out a combined 55% stake in the deep-water acreage.
A data room has been open for some months and there were expectations in the market that a farm-out deal could be struck soon, but an eleventh-hour flurry of interest means there will now be a delay.
“There is a high level of interest from major companies to come into this block and I anticipate that, certainly within 2024, we will have concluded a farm-in,” Africa Oil chief executive Roger Tucker told analysts recently.
Block 3B/4B is completely covered by 3D seismic data, studies of which have identified 24 prospects, many thought to be in the same Late Cretaceous play as the very big Jonker and Venus discoveries made by Shell and TotalEnergies’ on the Namibian side of this oil and gas rich basin.
“We have had significant discussions with one major already on that block,” Tucker told investors on 16 November, and he had hoped to wrap up a deal — which would likely involve drilling two exploration wells — sooner rather than later.
However, he pointed out that now, because “three other majors have asked to come in to” the data room, finalisation of a farm-out agreement will take a bit more time”.
“The [deal] is going to take a little bit longer. But I think it’s worth standing on the sidelines and not leaping at the first opportunity, because there has been this sudden uptick in the level of interest in the block,” he said.
Tucker said he wants to give these late arriving majors the time needed to study what is on offer in the data room, before a decision is made and a deal wrapped up.
He reckons an agreement could be clinched “towards the end of the first quarter” of next year.
Tucker did not name the interested parties, but it is thought they include Shell and TotalEnergies who already operate acreage elsewhere in South Africa’s Orange basin and could be keen to assess the potential of Block 3B/4B.
Africa Oil holds a 26.25% in the block, with Eco Atlantic holding 20% and privately owned South African player Ricocure on 53.75%
https://www.upstreamonline.com/exploration/three-majors-in-last-minute-dash-to-enter-race-for-slice-of-orange-basin-hotspot/2-1-1561042