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    Wednesday, June 5, 2024

    Eco Farms into South Africa’s Block 1 Amid Slate of Orange Basin Discoveries

    Following sizeable finds made in the Namibian side of the Orange Basin, South Africa’s offshore blocks offer promising opportunities for frontier E&P players.

    Oil and gas exploration company Eco (Atlantic) – through its wholly-owned subsidiary Azinam South Africa – has signed a farm-in deal with energy company Tosaco Energy for a 75% working interest in Block 1 - located in the offshore South African Orange Basin. Eco (Atlantic) has assumed operatorship of the block, with the remaining 25% stake expected to be transferred to South African company OrangeBasin Oil & Gas. Upon completion of the transaction, Eco (Atlantic) will assume control of one of the largest blocks in the Orange Basin.

    The African Energy Chamber (AEC) – representing the voice of the African energy sector – believes that this transaction is only the start of a wave of Orange Basin deals in the coming years. Having revealed substantial deposits in neighboring Namibia, the basin stands to play a catalyzing role in driving energy security in South Africa. The AEC commends the efforts by Eco (Atlantic) to unlock undeveloped blocks offshore South Africa and looks forward to a discovery being made in the coming years.

    The strategic acquisition is on trend with a strong lineup of companies looking at tapping into the Orange Basin. Since play-opening discoveries were made by energy majors Shell, TotalEnergies and Qatar Energy in 2022, over 15 finds have been made by an assortment of majors and independents. In February 2024, TotalEnergies intersected hydrocarbon-bearing intervals in the Mangetti-1X exploration well in Block 2913B – marking the second discovery made by the company in the basin. TotalEnergies is currently leveraging the Tungsten Explorer drillship to assess reserves available at the well. The discovery followed the company’s Venus-1X find made in February 2022. Research firm Wood Mackenzie estimates that Venus alone could hold as much as three billion barrels of oil – making it sub-Saharan Africa’s largest oil discovery.

    Additionally, in January 2024, multinational energy corporation Galp made its second oil discovery at the Mopane-1X well in PEL 83. Preliminary estimates place over 10 billion barrels of oil at the Mopane field. The company is currently seeking a farm-in partner to develop the block, with a 40% stake in the Mopane discovery up for grabs. Meanwhile, energy major Shell continues to witness a string of success, with its recent Lesedi-1X well – discovered in July 2023 – representing the fourth commercial discovery made by the firm in the Orange Basin. Other finds – namely, Graff-1X, La Rona and Jonker-1X – hold as much as 1.7 billion barrels combined. Shell is currently undertaking an extensive drilling campaign, with up to 25% of the company’s 2023-2024 exploration budget being directed towards deepwater exploration in the Orange Basin.

    These discoveries underscore the size and potential of the Orange Basin, with substantial deposits likely extending into South Africa. Block 1 is located on the maritime border of South Africa and Namibia, in close proximity to blocks held by Shell, Galp and TotalEnergies. The block is also situated by the Kudu Development Project – Namibia’s inaugural natural gas project with 1.3 trillion cubic feet of reserves. Kudu is poised to be a gamechanger for the country, providing low-cost power and fuel while laying the foundation for gas-driven economic growth. As such, Block 1’s proximity means that the asset could likely yield similar developments and the Eco (Atlantic) acquisition is the first step towards realizing this goal.

    “The Orange Basin has emerged as one of the most promising offshore plays worldwide in recent years. Exploratory success on the Namibian side of the basin shows strong potential for the South African side, and while exploration in this area has been slow to date, the recent farm-in by Eco (Atlantic) is poised to reverse this trend. The AEC has long-advocated for the need to advance drilling efforts in Africa and the Orange Basin stands to play a transformative role in the region’s energy landscape,” stated NJ Ayuk, Executive Chaiman of the AEC. “We look forward to witnessing commercial success across Block 1 and commend Eco (Atlantic) for their commitment to unlocking the potential of this asset.”

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