VANCOUVER: Africa Oil Corp. (AOC) has announced a farmout deal with TotalEnergies for its offshore Namibia oil interests.
The deal will see AOC’s investee company, Impact Oil and Gas, receive a 9.5% stake in two blocks that are part of the Venus oil development project. Impact will also get a cash reimbursement of about USD 99 million and a carry loan that covers all its costs until the first oil production.
The loan will be repaid from Impact’s share of the cash flow from the blocks. The deal is subject to approvals from the Namibian authorities and joint venture partners.
AOC and HCI, the two largest shareholders in Impact, support the deal as it enhances the value of their investment and gives them exposure to the potential growth of the oil resources in the blocks.
Africa Oil President and CEO, Roger Tucker commented: “The Farmout Agreement allows Africa Oil to retain a very attractive growth opportunity in a major energy project, that is expected to add significant reserves and production to our portfolio from the late 2020s through the 2030s and beyond, without stretching our balance sheet or exposing ourselves to the execution risk on a large-scale deepwater project. It also reinforces our view of TotalEnergies’ confidence in the development outlook for the Venus oil discovery and the follow-on prospectivity of the two blocks.
The successful collaboration of Impact management, the Company and Impact’s other major shareholder, HCI, has played a pivotal role in navigating the complexities of this transaction which will enable Impact and its shareholders to retain the upside potential from the on-going exploration and appraisal campaign on Block 2913B with significant prospects scheduled to be drilled in 2024, with zero capital expenditure to Impact.
This Farmout Agreement delivers on Africa Oil’s stated objective of focusing on and enhancing the value of its core assets. Also, with the funding secured for Impact’s Namibian assets through to first commercial production and no further demand on our balance sheet, we can accelerate the work to consolidate our assets ownership, and to consider other capital allocation options including shareholder capital returns and other growth opportunities.”
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