Africa Oil Raises Stake in Orange Basin Block to 18 Percent

Africa Oil Corp. said Monday it has increased its stake in Block 3B/4B on the South African side of the Orange Basin to 18 percent from 17 percent after completing a transaction with Eco (Atlantic) Oil & Gas Ltd.

Toronto, Canada-based Eco transferred a one percent stake to Africa Oil in exchange for the latter giving up its equity rights in Eco.

Africa Oil, also a Canadian company, canceled over 54.94 million common shares and more than 4.86 million warrants it had held in Eco. The canceled shares were worth about CAD 11.5 million ($7.99 million), Eco said in a separate statement Monday.

The transaction, announced July 29, 2024, was between Eco subsidiary Azinam Ltd. and Africa Oil subsidiary Africa Oil SA Corp. (AOSAC).

Eco retains a 5.25 percent interest in Block 3B/4B, an undeveloped area in South Africa’s portion of the Orange Basin, formed by the namesake river that also crosses Namibia, Botswana and Lesotho.

“This transaction is another step in delivering the strategy of increasing direct interest in Africa Oil’s key assets, including our opportunity set in the Orange Basin, a region with high levels of industry interest and activity”, Africa Oil chief executive Roger Tucker said Monday.

Gil Holzman, co-founder and chief executive of Eco Atlantic, said in Eco’s own press release Monday, “The transaction not only strengthens Eco's balance sheet on a per-share basis but also creates significant shareholder value through a material reduction in the Company's share count”.

As part of the transaction, Africa Oil's representative to Eco’s board of directors, Oliver Quinn, has stepped down. Eco has now appointed a new non-executive director.

Africa Oil raised its stake after two global energy giants agreed to farm in.

On August 28, 2024, Africa Oil said it had completed a deal with TotalEnergies SE transferring operatorship of Block 3B/4B to the French energy giant for $10 million. The lease is adjacent to TotalEnergies’ operated DWOB block, also on the South African side of the Orange Basin.

The agreement, which also involved 3B/4B co-venturer Ricocure (Pty.) Ltd., farmed out a combined 57 percent to TotalEnergies and its DWOB partner QatarEnergy. TotalEnergies got 33 percent and QatarEnergy 24 percent. Previous majority owner Ricocure, a local player, now owns 19.75 percent, down from 53.75 percent.

On September 16, 2024, South Africa’s Mineral Resources and Energy Department granted an environmental permit for an exploration campaign involving up to five exploration wells.

Block 3B/4B spans an area of 17,581 square kilometers (6,788.06 square miles), with water depths ranging from 300 meters (984.25 feet) to 2,500 meters. “There is approximately 14,000 km of 2D seismic and 10,800 km2 of 3D seismic over Block 3B/4B, identifying a large opportunity set of exploration prospects, with the majority of the prospects lying in approximately 1,500m of water”, Africa Oil says.

The block is “on trend with a number of oil discoveries including Venus”, it says.

The Venus 1X oil discovery on the Namibian side of the Oranges Basin was announced February 24, 2022. Drilling encountered about 84 meters of net oil pay “in a good quality Lower Cretaceous reservoir”, TotalEnergies then, calling the discovery “significant”.

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