Woodside has earned an option to acquire a 56% participating interest in PEL 87 from Pancontinental.
PEL 87 was awarded to a joint venture led by Pancontinental in early 2018 for up to 3 terms over 8 years (plus possible extensions).
The permit, in its first renewal exploration period, may be converted to a production licence under pre-agreed terms.
Namcor approved the permit from January 23, 2024, to January 22, 2026, with an exemption from the usual 50% relinquishment obligation at the end of the initial period.
Pancontinental chairperson Ernie Myers said the exemption ensures that the entire area extent of PEL 87 (10,970 km2) is preserved. Myers also said it meant that Pancontinental and its partners retain a significant footprint of prime exploration acreage within the Namibian Orange Basin exploration hotspot.
The participants in the PEL 87 Joint Venture are as follows: Pancontinental Orange Pty Ltd (Operator), 75%; Custos Investments, 15%; and Namcor, 10%.
Inter Oil (Pty) Ltd. had a 15% interest in the licence, which Sintana Energy took over on March 9, 2022, when it acquired 49%.
Sintana maintains an indirect 49% interest in Custos Energy (Pty) Ltd. and 7.5% carried interest in PEL 87.
In March 2023, Pancontinental executed an Option Deed with Woodside Energy Ltd, under which Woodside fully funded a US$38 million-plus 3D seismic survey across PEL 87, completed in May 2023.
Having financed the study, Woodside can acquire 56% of Pancontinental’s 75% working interest.
Woodside will have up to 180 days from granting a seismic license to Woodside Namcor to exercise its option.
Pancontinental announced on November 21 that Namcor had approved the seismic license and delivered it to Woodside Energy. As such, the long stop date is May 18, 2025.
If Woodside exercises the option, then Woodside and Pancontinental will enter into a farmout agreement whereby Woodside will fully carry (i.e., fund) the joint venture by drilling the first exploration well to be drilled within PEL 87.
To ensure that Pancontinental retains a 20% interest in the project, Pancontinental has, for a consideration of US$1.5 million, entered into an option agreement with Custos Investments (Pty) Ltd (Custos) to acquire a 1% interest from Custos by paying Custos a further US$1 million.
This option is exercisable by Pancontinental within a period similar to Woodside’s. Upon Woodside’s election to exercise its option, Woodside will pay Pancontinental approximately US$2.5 million, of which approximately US$1.5 million is for reimbursement of a portion of Pancontinental’s past costs.
After the first well, if the joint venture elects to drill a second well, then Pancontinental may either retain its 20% interest and pay its working interest share of the well or reduce its interest to 10% and have Woodside carry Pancontinental through the cost of the second well or
Also, at any time up to 60 days after any Development Plan’s approval, Pancontinental converts its interest to a 1.5% gross overriding revenue royalty interest against all hydrocarbon sales revenues from within PEL 87.
3D Seismic
Having acquired the Woodside Energy-funded 6,593 km2 3D seismic in early 2023 and after an extensive seismic processing program, Pancontinental received the final PEL 87 3D prestack depth migrated (PSDM) seismic volume from primary processing contractor CGG during January 2024.
Pancontinental’s data analysis confirms positive indications for a mature Kudu Shale oil source formation directly beneath the Saturn Turbidite Complex.
The Kudu formation was encountered within the only exploration well drilled within PEL 87, the Moosehead-1X well, in 2013.
Moosehead-1X targeted a Barremian-aged carbonate prospect that failed to yield carbonate reservoirs with sufficiently well-developed porosity.
However, Moosehead-1X did intersect the Kudu Shale, a thick, high-quality oil source rock believed to be the primary source for the giant oil discoveries made by TotalEnergies and Shell on-trend to the south.
At the Moosehead-1X location, analysis of Kudu Shale samples indicated that the source formation was at an early-mature stage for hydrocarbon generation. Based on Pancontinental’s preliminary interpretation of the final PSDM 3D seismic data, the Kudu formation appears at a significantly greater depth than Moosehead-1X. It is, therefore, likely to be at a greater level of maturity for oil.
The Moosehead-1X
The Moosehead-1 was the third exploration well in the 2013 exploration drilling campaign in the Orange basin. At the time, PEL 87 was PEL 24.
HRT operated the licence with an 86% interest, while Galp signed a farm-in agreement to acquire a 14% stake in PEL 23 in the Walvis basin and PEL 24 and PEL 28 in the Orange basin.
Galp agreed to carry part of HRT’s share of costs, limited by a cap, associated with drilling the exploration wells to be drilled in 2013.
The Moosehead-1 well was located in 1,716 m of water depth and was drilled to 4,170 m of measured total depth.
The partners abandoned the well when it turned out dry.
The main objective of the well was to test the resource potential of Barremian-aged carbonate reservoirs within a four-way dip closure, mapped on 3D seismic.
An extensive formation evaluation was performed to confirm the nature and quality of the carbonate reservoir and source rock intervals, including wireline logs and sidewall core samples.
The Moosehead-1 well encountered approximately 100 m of carbonates at the top of the primary target.
However, this location’s porosity was less developed than expected and was considered a dry hole.
Wet gas was encountered in the section, which increased wetness with depth.
At least two potential source rocks were penetrated, including the well-developed Aptian-age source rock.
Indications of source rocks in the deeper rift section were also apparent, though not penetrated.
