Chevron is set to acquire Trago Energy’s 10% participating interest in Namibia’s offshore Petroleum Exploration Licence 90 for US$11 million upfront, leaving Trago with no obligation to fund the upcoming Nabba-1X exploration well while retaining exposure to any future success through contingent payments.
Trago, a wholly owned subsidiary of Custos Energy, has agreed to transfer its entire PEL 90 interest to Chevron affiliate Harmattan Energy Limited, according to Sintana Energy, which holds a 49% indirect interest in Trago.
Under the agreement announced on 1 October, Trago will receive US$11 million in cash when the transaction is completed, together with additional consideration tied to future appraisal and production milestones.
The contingent consideration includes revenues associated with commercial production currently estimated at between 1.5 million and 2.5 million barrels of oil, depending on commodity price assumptions.
The structure allows Trago to retain financial exposure to future success on PEL 90 without contributing further capital to exploration and appraisal.
Completion remains subject to government, regulatory and third-party approvals.
The transaction comes ahead of the planned Nabba-1X exploration well, which Sintana described as a highly anticipated test of PEL 90’s prospectivity.
Once the transaction is completed, Trago will no longer hold a participating interest in the licence and will have no obligation to finance its share of Nabba-1X or other PEL 90 expenditure.
Sintana chief executive Robert Bose said the transaction was designed to reduce the company’s exposure to exploration spending while maintaining an interest in a successful outcome.
“This transaction is a further demonstration of our ability to reduce the capital intensity and downside risk of our portfolio while preserving exposure to successful outcomes associated with our high-impact, exploration activity,” Bose said.
“We look forward to the highly anticipated, upcoming Nabba 1-X well on PEL 90. Retaining capital free exposure to the significant prospectivity and opportunity associated with another Orange Basin license bracketed by the successful discoveries at Mopane and Venus adds material, potential upside to our world-class Atlantic margin portfolio.”
Sintana said any upfront proceeds it receives, after fees, taxes and other costs, will support its corporate activities.
PEL 90 covers approximately 5,433 square kilometres in Namibia’s offshore Orange Basin, and Chevron operates it.
Before adjusting for Trago’s proposed exit, and taking account of Chevron’s previously announced but still incomplete farm-out to Equinor, the licence interests are Chevron with 35.1%, QatarEnergy with 27.5%, Equinor with 17.4%, Trago with 10% and the National Petroleum Corporation of Namibia with 10%.
The announcement does not state how the interests will be distributed after Chevron acquires Trago’s stake.
No reserves or resources have been attributed to PEL 90.
The licence sits in the Orange Basin, where exploration activity has increased following major offshore discoveries, including TotalEnergies’ Venus discovery and Galp’s Mopane discoveries.
The Nabba-1X well will provide the next major test of PEL 90. Sintana’s announcement does not provide a drilling date or disclose a resource estimate for the prospect.
N$10m for UNAM
The transaction also carries a local commitment.
Upon completion, Custos will contribute N$10 million to the University of Namibia Foundation towards construction of UNAM’s planned new campus in Walvis Bay.
The transaction effectively converts its indirect exposure through Trago from a participating licence interest requiring future expenditure into a contingent economic interest dependent on the results of exploration, appraisal and any eventual production.
Sintana will pay Trago the US$11 million payment and any subsequent contingent consideration. Sintana’s economic exposure to Trago is through its 49% indirect interest.
