Sintana Energy has entered into a letter of intent (LoI) providing a period of exclusivity to evaluate an investment that would give the company an indirect interest in offshore Namibian license PEL 37 in the Walvis Basin.
Under the agreement, Sintana will have exclusivity until April 30, 2026 to conduct technical, commercial and legal due diligence on PEL 37 and its current holder, Paragon Oil and Gas, and to negotiate terms that would allow Sintana to contribute capital in return for becoming a shareholder in Paragon.
PEL 37 is located in the central Walvis Basin, immediately north of PEL 82, which is operated by a Chevron affiliate and where Custos Energy, an indirect affiliate of Sintana, holds a working interest. Chevron has previously said it plans to accelerate exploration activity on PEL 82, including drilling an exploration well, with Custos carried for initial operations.
The license is currently held 100% by Paragon and covers an area of 17,295 square kilometers in water depths ranging from 100 to 1,500 meters, with identified prospects at depths of between 300 and 600 meters. The area contains multiple large fan structures overlying a mature, oil-prone Aptian source rock.
Sintana will pay a $1 million deposit to secure exclusivity, one-third of which is non-refundable if the company decides not to proceed.
“The LoI we have entered into provides, at low cost, exclusivity over a material indirect interest in PEL 37, which is a high-impact block at the heart of the Walvis Basin. In particular, PEL 37 is immediately adjacent to PEL 82, where we already have an interest and where an initial exploration well is expected over the coming quarters.
“Investing for a material stake in PEL 37 would thus afford additional optionality associated with upcoming activity in our existing portfolio. In the coming months, and with the benefit of the exclusivity secured, we will undertake the work needed to assess whether we wish to pursue this strategic expansion of our core portfolio - further announcements will be made in due course,” said Robert Bose, chief executive officer of Sintana.