London-listed Tower Resources is likely to seal a farm-out deal with Spain's Repsol for acreage in Namibia next week as the Spanish major seeks to bolster its footprint on the continent.
Under the deal, Repsol will farm in for a 44% operating stake in license 0010, leaving existing players Arcadia with a 41% stake and Tower with 15%, a Windhoek-based ministry of energy official said Friday.
Tower Resources in June confirmed that Repsol was close to completing a move to farm-in to 0010 which contains blocks 1910A, 1911 and 2011A. An independent study put best estimates gross recoverable reserves potential of 12.28 billion barrels and 19.2 TcF in the event of a light oil discovery. It also said BP, already present in Namibia, was looking to farm-in to its relinquished acreage.
A spokesman for Repsol declined to comment on the deal with Tower except to confirm the company is keen to expand its portfolio in Africa.
"We have developed significant expertise in offshore and [subsalt] drilling. Hence the west coast of Africa becomes especially interesting," the spokesman said.
"We already have blocks in Angola and we believe the whole area could have significant potential which we believe is worth exploring."
SEVEN WELLS PLANNED; CHARIOT'S RIG ARRIVES NEXT WEEK
Namibia, though still at the early stages of exploration, is going to witness a critical couple of months as oil companies gear up drilling plans.
Petrobras, HRT, Chariot Oil & Gas, Repsol, subject to closure of the farm-in, will drill seven wells over the next 18 months, the official said.
Earlier exploration focused on the shallower offshore waters, while according to experts, the real potential lies in the deeper waters.
Better known for its uranium reserves, the Namibian government last July said 11 billion barrels of oil have been found off the southern coast.
AIM-listed Chariot has hailed Namibia as "one of the last frontiers for oil and gas exploration" and hopes to unlock what it believes is huge potential.
The company's CEO Paul Welch Friday said the Poseidon rig is expected to arrive on location next week to drill its second well in a four to five well exploration program.
The Kabeljou well should take two months to drill, Welch said.
Brazil's HRT, with 12 exploration blocks and reserves estimated at 7.9 billion barrels of oil equivalent, is also hoping to discover a new exploration frontier.
Analysts say it makes sense for companies with experience of Brazil's offshore to be looking at Namibia. The country's offshore basins have characteristics very similar to the Campos and Santos basins in Brazil, as do Angola's just to the north.
Australia-listed Pancontinental this week paid $4 million to increase its stake in its offshore license that is believed to cover an oil generating sweet spot.
