Sintana Energy Inc. (LON:SEI, TSX-V:SEI, OTCQX:SEUSF) has announced, further to a public press release from Trago Energy Pty Ltd, a wholly-owned subsidiary of Custos Energy (Pty) Ltd., that Trago has entered into an agreement with Harmattan Energy Limited, an affiliate of Chevron Corporation, in respect of its 10% participating interest in Petroleum Exploration License 90 (PEL 90). Sintana maintains a 49% indirect interest in Trago.
Specifically, the agreement provides for the transfer of all of Trago’s participating interest in PEL 90 to Chevron, in exchange for $11MM in cash at completion and further contingent consideration payable on the achievement of appraisal and production milestones, including the revenues associated with commercial production currently estimated to be between 1.5 and 2.5 MM barrels of oil (dependent upon commodity price assumptions.)
The transaction provides Trago, through the contingent consideration with ongoing exposure to the significant prospectivity and upcoming activities on PEL 90, including the Nabba-1X exploration well, while eliminating Trago’s funding and capital risk.
Completion of the transaction remains subject to governmental, regulatory and third-party approvals. Following completion, Trago will no longer hold a participating interest in PEL 90 and will have no further obligation to fund its share of costs on the licence, including the Nabba-1X exploration well. Any upfront consideration, net of all costs including fees and taxes, shall be used by Sintana to continue to support its corporate activities.
Upon completion of the transaction, Custos will contribute N$10 million to the University of Namibia Foundation towards the construction of UNAM’s new campus in Walvis Bay, as recently announced.
Robert Bose, Chief Executive Officer of Sintana Energy, said:
“This transaction is a further demonstration of our ability to reduce the capital intensity and downside risk of our portfolio while preserving exposure to the successful outcomes associated with high impact exploration evolving into production.
We look forward to the highly anticipated, upcoming Nabba 1-X well on PEL 90. Retaining capital free exposure to the significant prospectivity and opportunity associated with another Orange Basin license bracketed by the successful discoveries at Mopane and Venus adds material, potential upside to our world-class Atlantic margin portfolio.”
PEL 90 is located offshore Namibia in the Orange Basin and covers an area of approximately 5,433 km². The licence is operated by Chevron. Adjusted for recently announced, but as yet uncompleted, farm-out to Equinor and prior to adjustment for Trago’s interest exchange, the PEL 90 participants include Chevron (35.1% interest) Qatar Energy (27.5%), Equinor (17.4%), the National Petroleum Corporation of Namibia (10%) and Trago (10%). No reserves or resources have been attributed to PEL 90. As an exploration licence, PEL 90 has not generated any revenue.
