Sintana Energy Inc (TSX-V:SEI, OTCQB:SEUSF, FRA:3ZX1, AIM:SEI) said its 49%-owned affiliate Trago Energy has agreed to transfer its 10% stake in Namibia's PEL 90 offshore licence to Chevron affiliate Harmattan Energy Limited for $11 million in cash plus contingent payments.
The contingent consideration is tied to appraisal and production milestones, including revenues from commercial production currently estimated at between 1.5 million and 2.5 million barrels of oil, depending on commodity price assumptions.
The structure gives Trago, a wholly owned subsidiary of Custos, ongoing exposure to PEL 90's prospectivity, including the upcoming Nabba-1X exploration well, while eliminating its funding and capital risk.
Sintana said any upfront consideration, net of fees and taxes, will support its corporate activities.
"This transaction is a further demonstration of our ability to reduce the capital intensity and downside risk of our portfolio while preserving exposure to the successful outcomes associated with high impact exploration evolving into production," Sintana CEO Robert Bose said.
"Retaining capital free exposure to the significant prospectivity and opportunity associated with another Orange Basin license bracketed by the successful discoveries at Mopane and Venus adds material, potential upside to our world-class Atlantic margin portfolio."
Upon completion, Custos will contribute 10 million Namibian dollars to the University of Namibia Foundation toward construction of a new campus in Walvis Bay.
PEL 90 covers about 5,433 square kilometres in the Orange Basin and is operated by Chevron. Adjusted for a recently announced but uncompleted farm-out to Equinor, and before accounting for Trago's exit, participants include Chevron (35.1%), Qatar Energy (27.5%), Equinor (17.4%), the National Petroleum Corporation of Namibia (10%) and Trago (10%).
No reserves or resources have been attributed to PEL 90, and as an exploration licence it has not generated revenue.
