HCI investment to benefit from Namibia offshore oil field development

Impact CEO Siraj Ahmed.

Impact CEO Siraj Ahmed.

Published Jan 11, 2024


Hosken Consolidated Investments (HCI) said yesterday that its associate investment Impact Oil and Gas had entered into a farmout agreement with TotalEnergies in two Namibian offshore oil and gas exploration blocks, which are being brought into production.

HCI is a 49% shareholder in UK-based oil and gas prospecting private company, Impact Oil and Gas. Impact is a 20% and 18.89% participant in Blocks 2913B and 2912, offshore Namibia, respectively.

“This is a pivotal transaction for Impact that paves the way for its transition from an exploration company to a hydrocarbon producing company, through its participation in the development of the world-class Venus discovery,” Impact CEO Siraj Ahmed said in a statement on its website yesterday.

The agreement provides Impact with a carry loan for all of Impact’s remaining development, appraisal and exploration costs on the Blocks from January 1, 2024, until first oil production.

Blocks 2912 and 2913B are located within the northern part of the Orange Basin, an area, according to Impact, “that has attracted significant interest and excitement within the exploration community.”

Impact, through its wholly-owned subsidiary, Impact Oil and Gas Namibia, signed the farmout agreement with TotalEnergies EP Namibia, a wholly-owned subsidiary of TotalEnergies S.E., for the sale of a 9.39% undivided participating interests in Block 2912, and a 10.5% undivided participating interests in Block 2913B.

On completion of the transaction, Impact would hold a 9.5% interest in each of Blocks 2912 and 2913B.

In terms of the agreement, Impact would also be reimbursed in cash for its share of the past costs incurred on the Blocks, net to the farmout interests, which was estimated to be about $99 million.

The carry was repayable to TotalEnergies from Impact’s after-tax cash flow and net of all joint venture costs, including capital expenditures, from production on the blocks post the date of first oil production.

During the repayment of the carry, Impact would pool its entitlement barrels with those of TotalEnergies for more regular off-takes and a more stable cashflow profile, and would also benefit from TotalEnergies’ marketing and sales capabilities.

The transaction also enabled Impact to participate in further exploration in the Blocks.

Block 2913B is located offshore southern Namibia and covers about 8 215km² in water depths up to 3 000 metres. Impact entered the licence as operator in 2014, acquiring 2D, then 3D seismic data which defined the Venus prospect.

In 2017, Impact and Namcor were joined by TotalEnergies, bringing significant deep-water drilling expertise to the joint venture, and in 2019 QatarEnergy joined the joint venture.

Block 2912 covers about 7 884km² in water depths between 3 000 and 3 900 metres. Impact joined TotalEnergies and Namcor on the licence in 2019, as did QatarEnergy.

“This deep water Cretaceous play extends from southernmost Namibia, around South Africa as far as the Durban Basin and is the focus of Impact's exploration strategy…the results of the Venus and Graff wells have enhanced our confidence in the prospectivity seen across our southern African portfolio,” the group said.

HCI’s share price fell by 6.1% to R188.97 on the JSE yesterday morning, but the price remained well up from R53.50 on the same day three years ago.