Africa Oil completes farm down of South Africa's Orange Basin block to TotalEnergies, QatarEnergy

Africa Oil Corp said it has completed a farm down agreement with TotalEnergies and QatarEnergy in South Africa's Orange Basin.

The deal, first announced in March 2024, pertains to Block 3B/4B in the Basin.

Under the agreement, Africa Oil’s subsidiary AOSAC retains a 17% interest in Block 3B/4B, down from 26.25%, while operatorship of the block transfers to TotalEnergies.

Africa Oil could receive up to $46.8 million, contingent on meeting certain milestones, with an initial $3.3 million now due and further payments pending.

Additionally, Africa Oil will benefit from a full carry on its 17% share of joint venture costs up to a cap, repayable from production in the event of successful exploration and development. The carry is expected to fund the company’s share of drilling up to two wells.

In a separate July 2024 agreement with Eco (Atlantic) Oil & Gas Limited and its subsidiary Azinam Limited, Africa Oil will acquire an additional 1% stake in Block 3B/4B, subject to customary approvals from the South African government. This transaction will bring AOSAC's interest in the block to 18%.

Block 3B/4B spans 17,581 square kilometres within the Orange Basin, located offshore South Africa, and features significant exploration potential, including proximity to the Venus oil discovery. The block’s current stakeholders include TotalEnergies with a 33% operated interest, QatarEnergy with 24%, Ricocure with 19.75%, and Azinam with 6.25%.

“This farm down with TotalEnergies and QatarEnergy, two companies with deep geological knowledge of the basin, will facilitate exploration activities on Block 3B/4B, and extends our near-term scope,” Africa Oil CEO Dr Roger Tucker said in a statement.

The company has “an unrivalled position amongst its Independent E&P peer group” in the Orange Basin, Tucker added, including an interest in the Venus discovery and the follow-on appraisal and exploration upside on Block 2913B, offshore Namibia.

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