Seacrest-capital backed Azinam and Oslo-listed Panoro Energy have agreed to farm into Africa Energy's Block 2B offshore South Africa, which contains the A-J1 oil discovery.
Azinam will take a 50% stake and become the operator of the block, while Panoro will acquire a 12% percent share. Africa Energy will retain a 27.5% participating interest in the block. Crown Energy AB indirectly holds the remaining 10% participating interest.
The partners are planning to drill a well up-dip of the discovery later this year, targeting 349 million barrels of oil (Best Estimate Gross Prospective Resources)
Daniel McKeown, Managing Director of Azinam said Tuesday the company believed that Block 2B had the potential to provide South Africa with its first major offshore oil production.
He said:” In 1988 the A-J1 well offshore South Africa encountered significant quantities of oil in 150m water depth and only 25km from shore. With the benefit of new 3D seismic, we can see that A-J1 drilled the down-dip section of a potentially much larger oil accumulation in a number of prospects”
A total of 37 million barrels of best estimate gross contingent resources have been attributed to the AJ1 discovery by AEC.
"The exploration block has an exciting rift basin oil play, with an existing oil discovery and near-term plans to drill the Gazania-1 well targeting best estimated gross prospective resources of 349 million barrels (“MMbbls”),” Panoro said in a separate statement.
The well is expected to be spud as early as Q4 2020 depending on regulatory approvals and rig availability, Panoro said.
John Hamilton, CEO of Panoro, said: “This farm-in to Block 2B is in line with Panoro’s renewed strategy of acquiring minority high-impact exploration interests close to existing discoveries and with clear routes to commercialization.”
According to Panoro, completion of the farm-out agreement is subject to the consent of the Minister of Minerals and Energy of South Africa and the Azinam farm-out becoming effective; the approval process is anticipated to take approximately 6 months.