88 Energy LimitedHAS announceD the execution of a three stage farm-in agreement with a wholly-owned subsidiary of Monitor Exploration Limited to earn up to a 45% non-operated working interest in onshore Petroleum Exploration Licence 93 (PEL 93), located in the Owambo Basin, Republic of Namibia (Namibia).
Farm-In Agreement Highlights
· Farm-In Agreement provides a staged entry into PEL 93, a vast 18,500km2 onshore acreage position comprising blocks 1717 and 1817 in the Owambo Basin, Namibia (the Licence).
· Namibia represents one of the last frontier oil and gas jurisdictions capable of delivering multi-billion barrel discoveries, as evidenced by the recent Venus-1X offshore light oil discovery.
· Exposure to a first-class operating jurisdiction, with a highly competitive petroleum regime.
· Farm-In Agreement provides an opportunity to earn a significant working interest with future potential to transition to project operator.
· Farm-in to PEL 93 and forward work-program complementary to 88E’s existing Alaskan exploration and appraisal activities.
· Partner and operator, Monitor, has deep technical experience with extensive in-country and regional knowledge.
· The Licence includes an extensive lead portfolio, with ten significant independent structural closures identified from a range of geophysical and geochemical techniques. Considerable potential for more leads to be identified as dataset is expanded.
· Pathway to potential commercialisation with logical staged work-program.
· Forward program to include acquisition of ~200 line-kilometres of low-impact 2D seismic planned for mid-2024 and potential initial exploration well targeting the Damara play as early as H2 CY2025.
· Farm-in Agreement remains subject to Namibian government and other regulatory approvals, which are expected to be received by Q1 2024.
88 Energy Managing Director, Ashley Gilbert, commented:
“The execution of this farm-in agreement with Monitor provides 88 Energy and its shareholders with a fantastic opportunity to earn a significant working interest in a very large scale, highly prospective, under-explored acreage position on attractive and logically staged commercial terms.
We are very pleased to be partnering with Monitor who will provide a wealth of technical expertise and strong in-country and regional exploration experience. Monitor has completed a systematic historical work-program that has identified significant large-scale, untested prospects.
While 88 Energy is continuing its focus on its existing Alaskan North Slope assets, PEL 93 provides a logical expansion of 88 Energy’s existing portfolio, with similar scale and potential that our shareholders are accustomed to. The Licence includes an extensive lead portfolio which will provide an increased level of activity and value catalysts throughout the year.
We look forward to providing further detail on the project including an upcoming activity schedule aimed at delivering an initial program of approximately 200 line-kilometres of low-impact 2D seismic. This will minimise the environmental impact and be used to better define potential drilling prospects for as early as the second half of 2025.”
Farm-In Agreement detail
The Farm-In Agreement is between Eighty Eight Energy (Namibia) (Pty) Ltd (88EN), a newly formed, wholly owned subsidiary of 88 Energy and private Namibian company, Monitor Oil and Gas Exploration (Namibia) Pty Ltd (MELN), a wholly owned subsidiary of Monitor. MELN currently holds a 75% working interest in the Licence and acts as Operator of the exploration and development of PEL 93. Private Namibian company, Legend Oil Namibia (Pty) Ltd (Legend) holds a 15% working interest and and Namibian government entity National Petroleum Corporation of Namibia (Pty) Ltd (NAMCOR) holds a 10% working interest in the Licence.
Under the terms of the Farm-In Agreement 88 Energy, together with the current working interest owners, will become party to a new Joint Operating Agreement (JoA) in relation to the Licence and may earn up to a 45% working interest in PEL 93 by funding its share of agreed costs under the 2023-2024 approved work program and budget as defined in the Farm-In Agreement (2024 Work Program), and any future work program budgets yet to be agreed. The maximum total investment costs are anticipated to be US$18.7 million.
Three stage Farm-In Agreement schedule:
· Stage 1: 88 Energy to pay Monitor US$3.7 million over four instalments, in consideration for past costs of US$0.7 million as well as a carry of up to the first US$3 million1 of the 2024 work program which includes a ~250 line-kilometer 2D seismic acquisition program on behalf of the Joint Venture, for a total of 20% working interest in PEL 93:
§ 1st instalment: US$0.28 million in cash on signing for partial payment of back costs;
§ 2nd instalment: US$1.25 million to be paid in 88 Energy shares on signing for part payment of the 2D seismic carry4;
§ 3rd instalment: US$1.25 million to be paid in 88 Energy shares upon approval of the Licence working interest transfer by the Namibian government expected within 30-60 days, as a further payment in relation to the 2D seismic program carry; and
§ 4th Instalment: US$0.9 million in cash to be paid on or before 1 June 2024 for remaining payment of back costs and 2024 work-program carry.
· Stage 2: 88 Energy to pay to MELN up to the first US$7.5 million of the first well gross cost, estimated at US$12 million, to receive a further 17.5% working interest, for a total of 37.5%2 working interest.
· Stage 3: 88 Energy has the option to fund the first US$7.5 million of the second well gross cost, estimated at US$12 million3, to receive a further 7.5% working interest taking 88 Energy’s aggregate working interest to 45%.
· Following the commencement of commercial production, Monitor will also be entitled to a Gross Royalty of 2% of the revenues.
Background to the Licence area
PEL 93 covers a vast 18,500 km2 acreage position in the north of Namibia, comprising blocks 1717 and 1817 within the Owambo Basin. The region has been identified as one of the last remaining under-explored onshore frontier basins and one of the World’s most prospective new exploration zones.
Recent drilling results on nearby acreage has highlighted the potential of a new and underexplored conventional oil and gas play in the Damara Fold belt, referred to as the Damara Play.
Historical assessment utilised a combination of techniques and interpretation of legacy data to identify the Owambo Basin, and specifically blocks 1717 and 1817, as having significant exploration potential.
88 Energy has been impressed with the systematic exploration approach undertaken by Monitor since award of PEL 93 in 2018 and is extremely encouraged by the correlation and validation of results to date, which has highlighted the enormous potential of the acreage.
PEL 93 has entered the first renewal period which requires a firm commitment to complete a (i) 200+ line-kilometre 2D seismic program (minimum spend of US$2 million) and (ii) to drill a contingent exploration well within a two-year period commencing October 2023.
The current and potential future PEL 93 Joint Venture partners and working interests are as follows:
|Entity||Pre Farm-in||Stage 1(Past costs & 2D)||Stage 2(1st Well)||Stage 3(2nd Well)|