Sintana Energy has agreed a transaction that removes its indirect interest in Namibia’s PEL 90 from future funding requirements while retaining exposure to potential exploration and production success.
Sintana’s 49%-owned Trago Energy has agreed to transfer its 10% participating interest in Petroleum Exploration Licence 90 to Harmattan Energy, an affiliate of Chevron. Trago will receive US$11 million in cash when the transaction completes, together with additional contingent payments linked to appraisal and production milestones.
The agreement changes Sintana’s financial exposure to PEL 90 ahead of the planned Nabba-1X exploration well. Following completion, Trago will no longer be required to fund its share of costs on the licence, including the drilling programme. This removes the immediate capital requirement associated with maintaining the 10% participating interest.
At the same time, Trago will retain potential financial exposure through the contingent consideration. The payments include amounts linked to appraisal and production milestones, with commercial production currently estimated to represent between 1.5 million and 2.5 million barrels of oil, depending on commodity price assumptions.
For Sintana, the transaction therefore shifts PEL 90 from a direct funding commitment to an arrangement where future value can still be generated if exploration and subsequent development are successful. The upfront consideration, after costs, fees and taxes, is expected to be used to support Sintana’s corporate activities.
Sintana Energy Inc (TSX-V:SEI, OTCQX:SEUSF) is a public oil and natural gas exploration company listed on the Toronto Venture Exchange.
