Canadian Natural Resources Limited has announced the completion of its process to find a world class partner for the joint exploration of its Block 11B/12B offshore South Africa.
After a lengthy and thorough process, where Canadian Natural received a number of strong, competitive offers from well-known industry participants, the Company elected to partner with Total E&P South Africa BV, a wholly owned subsidiary of Total SA, based on their knowledge, experience and successful history in deep water exploration.
Following approval from the Government of South Africa, the Company’s wholly owned subsidiary, CNR International (South Africa) Limited has completed a Farm-Out Agreement with Total. The Agreement provides that in exchange for a 50% working interest in the Block and the right to Operatorship, Canadian Natural received an undisclosed upfront cash payment, a recovery of 50% of past incurred costs and a carry in the first exploration well drilled up to a gross cost of US$150 million. The first exploration well is targeted to be drilled in 2014. In the event of a successful multi-well exploration program to define the prospect and subsequent commercial development, additional consideration will be received.
Block 11B/12B is located in the Outeniqua Basin, approximately 175 kilometers off the southern coast of South Africa and covers an area of approximately 19,000 square kilometers with water depths ranging from 200 – 1,800 meters. Canadian Natural has undertaken extensive seismic studies of the Block. The newly formed joint venture will work towards finalizing the location of the initial exploration well.
Commenting on the completion of the Farm-Out Agreement, Steve Laut, President of Canadian Natural said “The exploration potential in this offshore area of South Africa is exciting. We are pleased to have the opportunity to work together with Total, a world class partner. The completion of this joint venture demonstrates the opportunities provided to the Company through its international portfolio which contributes to our vast and diversified asset base. Working together with Total and the Government of South Africa, we are in a positive position to maximize shareholder value in this exciting prospect.”
Our acquisition in this extensive frontier exploration asset demonstrates our determination to establish ourselves in new plays. South Africa’s deep offshore, in particular the Outeniqua Basin, is one of the few remaining under-explored offshore regions in Africa. Recent discoveries in the Falkland Islands (Malvinas Islands) together with the prospects identified on the block offer us very promising opportunities,” said Marc Blaizot, Senior Vice President, Exploration at Total. “The results of the upcoming exploration well will be decisive, especially in terms of operability of the area in such a harsh environment. As the Operator, we will leverage our recognized deep offshore expertise and experience in challenging waters such as the North Sea and the Barents Sea, to quickly appraise the potential of this acreage.”
September 30, 2013