And debt free we are sitting below cash - how crazy is that. I am Glad we have more II's on board to add some stability. As for the Centrals farm out - another option could be Chariot believe what they have is worth more in farm out terms and that is why they are negotiating for longer - after all - it's drill ready and now no more acreage available unless via farm-in. I think Namcor have now sent a strong message - from now on - use it or lose it .. In other words drill. Mulunga saying three drills next year is a good sign - he was proven right on all other occasions (more oilers OMV,Murphy, SHELL) also (BP/Petribras not renewing) he also reckons BP will stay in Namibia - they have no choice but to farm in ..
Based on earlier farmout activity I expect potential farminees to pay (at least) about:
+~US$6,000/ km² acreage + ~US$7,400/ km² 3D seismic
Examples of what farminees have paid to farm into Blocks offshore Namibia the last couple of years:
BP Namibia Block 25% of 2714A (5,480km²) ~US$30MM US$1.2MM per 1% of one Block, US$21,897 per 1km²
Galp Energia Namibia Blocks 14% of 2112B, 2212A, 2713A, 2713B, 2813A, 2814B, 2914A (37,744km²) ~US$60MM US$0.61MM per 1% of one Block, US$11,355 per 1km²
SHELL Namibia Blocks 90% of 2913A, 2914B (~10,000km²) ~US$54MM US$0.3MM per 1% of one Block, US$ 6,000 per 1km²
PGS Namibia Blocks 10% of 2312A, 2312B, 2412A, 2412B (16,800km²) ~US$10MM US$0.33MM per 1% of one Block, US$5,952 per 1km²
PetroBras Namibia Block 50% of 2714A (5,480km²) ~US$16MM US$0.32MM per 1% of one Block, US$5,840 per 1km²
Tullow Oil Namibia Blocks 65% of 1910A, 1911A, 2011A (17,295km²) ~US$52MM US$0.27MM per 1% of one Block, US$4,626 per 1km²
One reason the values paid differ from eachother is because some companies have already acquired & interpreted expensive 3D data before farming out, while others have not. For example HRT has acquired and interpreted ~10,000km² of 3D seismic with estimated costs of > US$70MM. Another reason is of course the amount of prospective resources and their chance of success. As an example BP paid a huge premium, four times as much as others to farm into Block 2714A, the reason was the Nimrod prospect (prospective resources ~ 5 bn boe), unfortunately turned out as an non commercial well, but proved source rocks capable to fill shallower reservoirs, afterwards Chariot was able to secure the license to the south from 2714A and is now targeting such shallower reservoirs ...
Namibia Central Blocks: 2312A&B & 2412A&B: 65% (Operator), 16,800km², 3,500km² 3D
Potential Farmout Value (100%): US$6,000*16,800km² = US$101MM & (3,500km²) 3D ~US$26MM = US$127MM
So I expect Chariot to farmout ~30% of their Central Blocks For ~US$38MM or a free carried well (35%) and more 3D Seismic.
We were told of the high industry interest in the centrals and the region as a whole yet nothing came of it. We shouldn't have been in a position where we needed to renew the licence or relinquish it. As a matter of fact we did relinquish the licence and were then re-awarded this but at reduced equity. AziNam went from 10% equity before to 20% equity now.
My calculation is much simpler than yours - 25% of $130m is $32.5m.
We are in a much better position in terms of data and expertise than Pancontinental as well.
The licence was not renewed in August. Chariot was awarded a new licence, which resulted in a 25% reduced equity. Of course Chariot could not renew the existing licence because it would take us in to the drilling phase and we cannot drill without a partner. There was ample time from September 2013 to August 2014 to farm out especially with such ''high industry interest''.
Our equity in the Namibian centrals has decreased from 90% to 65% - our recent Brazilian farm out to AziLat netted us $7.5m for 25% equity. The difference is that the centrals are drill ready with third party validation from the HRT well. Last year Tullow farmed in to Pancontinental's Namibia acreage, the farmin expenditure is potentially up to US$130 million. We have potentially lost circa $32.5m by loosing the 25% equity.
Ah "suspect" is a little more grounded than "expect" Chariot hold a strong hand in Namibia but somewhat puzzled / slightly worried in lack of appetite by Farm in ees to come aboard... No more Namibia licenses mean very little if commercially charged reservoirs remain in doubt.. Shell having a sniff all sides of Chariot now, a pessimist would say, is that because they dont like the look of whats in the middle held by Char ? Namibia is what most of the hype has been about yet zero to backwards progress here in securing partners - Fact. Fingers crossed that is about to change.
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