The otherwise quiet Owambo-Etosha Basin in Namibia has attracted a new investor, the Australian company 88 Energy, which wants to invest N$355m (US$18,7m) into PEL 93, operated by the British entity Monitor Exploration Limited.
The Owambo Basin, regarded as the last remaining under-explored onshore frontier basins and one of the World’s most prospective new exploration zones, is one of Namibia’s three onshore basins with the Nama and Kavango basins.
Monitor holds a 75% interest in PEL 93, which covers an 18,500 km2 acreage and comprising blocks 1717 and 1817. Monitor acquired the licence when it was formed in 2018. The other partners are Legend Oil sitting on 15% and Namcor owning 10%.
Under the terms of the Farm-In Agreement 88, Energy, together with the current working interest owners, will become party to a new Joint Operating Agreement (JoA) and may earn up to a 45% participating interest by funding its share of agreed costs under the 2023-2024 approved work program.
The maximum total investment costs are anticipated to be US$18.7m in three stages.
In the first stage, 88 Energy will pay Monitor US$3.7m over four instalments to cover past costs and carry up to the first US$3m of the 2024 work program, including a ~200 line-kilometre 2D seismic acquisition.
88 Energy will pay the first instalment of US$0.28m in cash on signing for part payment of back costs and the second instalment of US$1.25m in shares on signing for part payment of the 2D seismic.
The third instalment of US$1.25m will be in shares upon approval of the licence working interest transfer by the Namibian government, expected within 30-60 days as a further payment for the 2D seismic program.
The fourth instalment of US$0.9m in cash will be paid on or before 1 June 2024 for the remaining payment of back costs and 2024 work-program carry.
The second stage will see 88 Energy paying Monitor up to the first US$7.5m of the first well gross cost, estimated at US$12m, to receive a further 17.5% working interest for a total of 37.5%2 working interest.
In the third stage, 88 Energy will have the option to fund the first US$7.5m of the second well gross cost, estimated at US$12m, to receive a further 7.5% working interest, taking 88 Energy’s aggregate active interest to 45%.
88 Energy managing director Ashley Gilbert said the execution of the farm-in agreement provides shareholders with a fantastic opportunity to earn a significant working interest in a vast scale, highly prospective, under-explored acreage position on attractive and logically staged commercial terms.
Gilbert said Monitor will provide a wealth of technical expertise and in-country solid and regional exploration experience.
“Monitor has completed a systematic historical work program identifying significant large-scale, untested prospects,” Gilbert said.
He added that PEL 93 provides a logical expansion of 88 Energy’s existing portfolio, with similar scale and potential to which our shareholders are accustomed.
“We look forward to providing further detail on the project, including an upcoming activity schedule to deliver an initial program of approximately 200 line-kilometres of low-impact 2D seismic. This will minimise the environmental impact and be used to better define potential drilling prospects for as early as the second half of 2025.”
