Sintana Energy announced on January 21 that it has entered into a letter of intent providing for a period of exclusivity regarding an investment for an indirect interest in petroleum exploration licence 37 in the Walvis Basin. The licence is located offshore Namibia and is situated north of PEL 82, where an affiliate of Chevron serves as the operator.
The petroleum exploration licence 37 is currently held and operated by Paragon Oil and Gas Company. The block covers an area of 17,295 square kilometres in water depths between 100 and 1,500 metres.
Sintana Energy noted that identified prospects exist at depths between 300 and 600 metres, which directly overlie oil-prone Aptian source rock.
To secure the exclusivity period, which runs through to April 30, Sintana Energy will pay a deposit of $1 million.
The company stated that one third of this payment is non-refundable if it elects not to proceed with the transaction. This timeframe allows the firm to perform technical, commercial and legal due diligence on Paragon Oil and Gas Company and the licence area.
On the adjacent PEL 82, Chevron has previously stated its intention to accelerate exploration activities. This includes the drilling of an exploration well that is, "expected over the coming quarters," stated Sintana Energy.
Custos Energy, an affiliate of Sintana Energy, holds a working interest in that neighbouring block.
Chief Executive Officer of Sintana Energy, Robert Bose, said, "The LOI we have entered into provides, at low cost, exclusivity over a material indirect interest in PEL 37, which is a high-impact block at the heart of the Walvis Basin."
He further noted that the potential investment would provide, "additional optionality associated with upcoming activity in our existing portfolio". Sintana Energy stated it will assess the expansion over the coming months.
The agreement allows Sintana Energy to contribute capital to satisfy work obligations, which would result in the firm becoming a shareholder of Paragon Oil and Gas Company.