Petrobras has acquired from Chariot Oil and Gas Limited, an independent oil and gas exploration group, a 50% interest in the exploration Block 2714 A, located in the offshore of southern Namibia. In a ceremony held on (18/05), at Petrobras headquarters in Brazil, the two companies signed a farm-out agreement for the block. The agreement was signed by Petrobras’ wholly owned subsidiary Petrobras Oil and Gas B.V. and Enigma Oil and Gas Exploration Ltd, a wholly-owned subsidiary of Chariot. Enigma will retain 50% of the participation and the operatorship of the block.
Under the terms of the farm-out agreement in return for a 50% interest in block 2714A Petrobras will pay to Enigma:
- Acash payment of US$16.04 million, comprised of a cash consideration, past costs including the reimbursement in respect of the recently acquired 3D seismic programme in block 2714A; plus
- in the event of a commercial discovery, payment of a production bonus equal to 4.75% (after royalties) of Petrobras’ share of production up to either 2 million barrels of oil equivalent or a value of US$118.0 million , whichever occurs first.
In addition, Petrobras will perform geological and geophysical studies in order to model the petroleum system of the area, with the option to withdraw from the block before drilling a well. The initial period of exploration expires in August 2010. The document signed by both companies is still subject to approval of the Minister of Mines and Energy of Namibia.
The block covers an area of approximately 5,500 square kilometers in water depths ranging from 150 to 1,500 meters. It is located in the Southwest African Coastal Basin, between Orange and Luderitz sub-basins, at an average distance of 80 km from the coast. A 3D seismic program of 1,000 square kilometers has been concluded recently by Enigma in the block. The processing and interpretation of these data are ongoing and a further 3D seismic acquisition in block 2714A of approximately 1,500 square kilometers is scheduled to start later this year.
After completing the evaluation of the 3D seismic data, Petrobras may elect to enter a renewal period of the contract, which includes a commitment to drill an exploratory well, becoming the operator therefrom.
The signature of this agreement is aligned with the strategy of Petrobras to seek opportunities in deep and ultra deep waters in West Africa, where the company already has important operations in Angola and Nigeria.