BP Acquires Its First Operated Stakes in Namibia

Eco (Atlantic) Oil & Gas Ltd signed a farm-down agreement transferring its operatorship in three exploration blocks offshore Namibia to BP PLC, the companies said Monday.

"Namibia is a region attracting growing industry interest and has a number of exciting frontier basins. This agreement marks BP's entry into the country as an operator, strengthens BP's exploration portfolio and provides long-term growth potential", Gordon Birrell, BP executive vice president for production and operations, said in an online statement issued by the British energy giant.

The transaction gives BP 60 percent stakes in Petroleum Exploration Licenses (PEL) 97, 99 and 100 in the Walvis Basin.

Eco, a Toronto, Canada-based explorer focused on the Atlantic Margin in Africa, would retain 25 percent. The National Petroleum Corporation of Namibia (NAMCOR) owns 10 percent.

The remaining 5 percent interests in PEL97, 99 and 100 are held by local players Tangi Trading Enterprise CC, Lotus Exploration (Pty) Ltd and Moonshade Investments (Pty) Ltd respectively.

"This transaction is a clear demonstration of our strategy partnering with supermajors and IOC's to derisk our portfolio while retaining material exposure to significant upside potential with very limited financial requirements from Eco", Eco president and chief executive Gil Holzman said in a separate statement.

"The proposed exploration work program (which is subject to requisite government approval), includes completing seismic reprocessing on PEL97 and carrying out a 3D seismic survey of at least 3,000 square kilometers [1,158.31 square miles] on PEL99 and PEL100", Eco said.

"BP will carry 100 percent of Eco's 25 percent retained PI [participating interest] as well as Eco's proportionate share of the NAMCOR (10 percent) and the local partners (5 percent) PI carry on PEL97, PEL99 and PEL100 against the current exploration phase", it said.

The transaction also involves a one-time cash payment of $2.7 million.

"If BP and partners elect to enter the second renewal period of the license term in 2028 and commit to drilling an exploration well, Eco will have the option to either (i) exercise a put option to transfer an additional 10 percent PI to BP in exchange for a full carry on Eco's remaining 15 percent PI subject to a cap of $21 million net to Eco for each well on each of the licenses (PEL97, PEL99 and PEL100); or (ii) elect to retain its 25 percent PI of the costs associated with such drilling of a well during the second renewal period", Eco added.

"The maximum aggregate carry consideration payable by BP in respect of each put option (should all put options namely on PEL97, PEL99 and PEL100 be exercised) is $63 million with a cap of $21 million per put option".

BP is already present in the Southern African country, and last year it made two discoveries (Capricornus-1X and Volans-1X) as a non-operator on Namibia's side of the Orange Basin.

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