Africa Oil has announced that it has signed two production sharing contracts (PSCs) with the Republic of Equatorial Guinea for offshore Blocks EG-18 and EG-31. These PSCs are subject to ratification by the country’s government. Africa Oil will hold eighty per cent (80%) operated interests in each block with the balance to be held by GEPetrol, the national oil company of Equatorial Guinea. GEPetrol has the option of acquiring an additional fifteen percent (15%) participating interest in each block. Both blocks are covered by 3D seismic data and the total minimum work commitment for both blocks in the initial exploration periods is a combined total of USD 7 million, with no drilling commitment.
In Block EG-31 the Company has identified several gas-prone prospects in shallow water depths of less than 80 meters and close to existing infrastructure, including the offshore Alba gas field and the onshore Punta Europa Liquefied Natural Gas (LNG) Terminal. Potential future discoveries could present low-cost, low-risk gas development opportunities targeting international LNG markets.
In Block EG-18 the Company has identified a potentially large and highly prospective basin floor fan prospect of Cretaceous age, that is similar to those within the Company’s exploration portfolio in Namibia and South Africa.
Elsewhere Panoro Energy has been awarded a 56 percent participating interest and operatorship of Block EG-01 located offshore Equatorial Guinea (pending ratification). Partners in the block will be Kosmos Energy (24 percent pending signature) and GEPetrol (20 percent). Block EG-01 borders both Block G where Panoro has a 14.25 percent non-operated interest (and which contains the producing Ceiba Field and Okume Complex) and Block S where Panoro has agreed to farm-in to a 12 percent non-operated interest.
Block EG-01 is located in water depths ranging from 30 metres to 500 metres, mainly shallow, and is covered by high quality 3D seismic. The partners have been awarded block EG-01 for an initial period of three years during which they will conduct subsurface studies based on existing seismic data to further define and evaluate the prospectivity of the block. Following this, the partners will have the option to enter into a further two-year period, during which they will undertake to drill one exploration well.
Past exploration activities on Block EG-01 have tested and proven the key geological elements for successful exploration. These findings have led to the identification of an extensive prospect inventory within tie-back distance to the Ceiba Field and Okume Complex facilities. Since 2003, three exploration wells have been drilled on the block, with two encountering thin oil and gas pay and one encountering oil shows. The main hydrocarbon plays are Eocene sands and Upper Cretaceous turbidites analogous to the Block G plays where over one billion barrels STOIIP has been discovered. Moreover, there is potential for deeper Albian targets, similar to the Block S prospect, which is scheduled for drilling in 2024.
Africa Oil President and CEO Keith Hill commented: “I am pleased to announce our entry into Equatorial Guinea with two highly-prospective offshore blocks. While we continue our primary focus on cash flowing production assets in order to underpin sustainable shareholder distributions, we still look to add exploration blocks with attractive fiscal terms in advantaged areas where discoveries can be quickly appraised and brought on stream. Block 31 offers the potential for low-risk gas prospects that are in a proven petroleum province with infrastructure and ullage for significant additional volumes of gas. In Block 18 we see a large turbidite fan that is reminiscent of some of our large discoveries in Namibia and South Africa. These blocks offer high-impact value upside for our shareholders at relatively low cost, and we look forward to continued collaboration with the government of Equatorial Guinea to explore and develop its natural resources”.
John Hamilton, CEO of Panoro, commented:
“The award of Block EG-01 is a natural and complementary expansion of our portfolio in Equatorial Guinea and in line with our infrastructure led exploration strategy, increasing our access to a large inventory of oil prospects and leads within tie back distance of existing production facilities for a modest financial exposure. Panoro is pleased to become an operator in Equatorial Guinea and will seek to leverage its core subsurface skill set and we look forward to working closely with our partners and stakeholders. We are grateful to the Ministry of Mines and Hydrocarbons for the award of Block EG-01 and this endorsement of Panoro’s strategy to continue growing its business in Equatorial Guinea.”