Oil companies Azinam and Panoro Energy have completed their previously announced acquisitions of stakes in Block 2B offshore South Africa, e containing the A-J1 oil discovery from 1988, from Africa Energy Corp.
Azinam has taken 50 percent and will become the operator, while Panoro Energy has taken 12.5 percent interest in the offshore block. Africa Crown Energy AB indirectly holds the remaining 10% participating interest.
Africa Energy said Tuesday it had transferred operatorship and an aggregate 62.5% participating interest in the Exploration Right for Block 2B in consideration for a carry through the next exploration well, Gazania-1, which is expected to spud by the end of 2021.
Garrett Soden, Africa Energy's President and CEO, said, "We are excited to partner with Azinam and Panoro on Block 2B to drill the Gazania-1 exploration well this year. Block 2B has the A-J1 oil discovery from 1988 in shallow water close to shore with significant contingent and prospective resources. Gazania will target a relatively low-risk rift basin oil play up-dip from the discovery. IHS Markit recently highlighted Gazania as one of the top high-impact wells expected to be drilled globally in 2021. We have already started the rig contracting process, and we look forward to proving up more resource offshore South Africa."
Azinam paid Africa Energy US$0.8 million at close, which includes reimbursement of costs incurred prior to completion. In addition, Azinam will pay a disproportionate amount of the Gazania-1 exploration well and other joint venture costs. To support this obligation, Azinam paid a second US$1.5 million deposit to Africa Energy at close and is required to place additional funds in escrow prior to signing a rig contract. Azinam is a private Southern Africa-focused oil and gas exploration company supported by Seapulse Ltd., a vehicle backed by Robert Friedland and Seacrest.
As for Panoro, in consideration for the assignment of 12.5 interest, subject to Azinam placing the required funds in escrow, Panoro will pay a disproportionate amount of the Gazania-1 exploration well costs. Panoro is an Africa-focused independent oil and gas exploration and production company listed on the Oslo Stock Exchange.
John Hamilton, CEO Panoro, said: "Following our recently announced successful entry into Equatorial Guinea, we are pleased to now be adding a further country into our growing portfolio of African E&P assets. Block 2B represents a compelling exploration opportunity for Panoro, in a country with exciting world-class oil and gas discoveries. The Gazania-1 well is an exploration prospect updip of an existing oil discovery with material potential upside. We look forward to drilling this well with our partners, Africa Energy and Azinam, by the end of the year."
Block 2B is located in the Orange Basin and covers 3,062 square kilometers off the west coast of South Africa 300 kilometers north of Cape Town with water depths ranging from 50 to 200 meters. Oil was discovered and tested by Soekor in the A-J1 borehole drilled in 1988.
Thick reservoir sandstones were intersected between 2,985 meters and 3,350 meters. The well was tested and flowed 191 barrels of oil per day of 36 degree API oil from a 10 meter sandstone interval at about 3,250 meters.
According to Africa Energy, significant prospectivity has been identified over the entire A-J graben area using 686 square kilometers of 3D seismic data from 2013.
Using more recent 3D seismic data, significant upside potential has been identified in six prospect areas at depths of up to 1,000 meters shallower than the original well. The next proposed exploration well, Gazania-1, will be drilled into the Gazania and Namaqualand prospects identified on 3D seismic data.