Tullow Oil has decided to withdraw from the PEL30 license (Cooper Block) offshore Namibia. This was confirmed by Eco Atlantic, Tullow’s partner in the block.
Eco on Monday said that Tullow had sent it a notice confirming that it is unable to either enter into the Second Renewal Period under the PEL30 license or to make a financial commitment to drilling on the Block.
A farm-out agreement the two companies signed in 2014 required Tullow to make a financial commitment to drilling one exploration well before renewing its interest in the Second Renewal Period in Q1 2019, and, in the event that a well was not drilled having entered the Second Renewal Period, pay Eco a significant penalty.
Eco has explained that Tullow’s decision was as a result of its own proposed farm-in partner, ONGC withdrawing from their agreement with Tullow on PEL30. Tullow had in November 2017, agreed a farm-down of a 15% interest in the PEL30 license to ONGC Videsh in November 2017, however, ONGC has now withdrawn.
According to Eco, ONGC’s withdrawal has led to Tullow prioritizing its exploration budget, which will now lead to Tullow transferring its 25% working interest in the license to Eco.
Eco has had the 1,100 km2 3D survey, full processing and interpretation and past costs all paid for by Tullow and it will now receive back Tullow’s Working interest. On completion of the transfer, Eco will now hold a 57.5% Working Interest in the Cooper Block.
“With more than three and a half years still to drill on the Cooper Block under the terms of the license, and with a drill ready target (The Osprey Prospect), the company has already started discussions with potential farm-in partners to replace Tullow and to jointly drill the Osprey Prospect. Eco’s other partner on the Cooper Block, Azinam Ltd (“Azinam”), has previously announced that it would like to proceed with further exploration of the block, including the drilling of a well,” Eco said.
The revised working interests on completion of the transfer to Eco of Tullow’s interest in the Cooper Block will be: Eco (Operator) – 57.5%; Azinam – 32.5%; Namcor – 10%
Gil Holzman, CEO of Eco commented: “We thank Tullow for our four years’ carried partnership on the Cooper block and for advancing it through extensive 3D studies, interpretation, and targets selection all the way to now being drill ready. As partners on both sides of the Atlantic, we understand Tullow’s drilling budget prioritization.
“We thank Tullow for our four years’ carried partnership on the Cooper block and for advancing it through extensive 3D studies, interpretation, and targets selection all the way to now being drill ready. As partners on both sides of the Atlantic, we understand Tullow’s drilling budget prioritization.”
This reflects a shift in both Tullow’s and Eco’s priorities towards Guyana. Guyana clearly remains the focus for both partners, as recently announced by senior executives of both companies. The opportunity the companies share on the Orinduik Block in Guyana is outstanding, with much lower near-term risk, following the amazing success of ExxonMobil on the adjacent Stabroek block and our own 3D data interpetation. We expect 2019 to be a significant and defining year for Eco.”
Colin Kinley, COO of Eco commented said Eco was in discussions with other potential farm-in partners “as there are many parties currently seeking additional opportunities in the Walvis Basin as Exxon, Total, and the other majors are now moving into the area as exploration matures.”
He said: Indeed, although unfortunate for Tullow, the company’s recent Cormorant dry hole further proved the existence of a working source rock. Our increased interest in the Cooper Block, which is defined as having P50 Prospective oil of over 800 million barrels, is the opening of a new door with paid-up exploration operations and permitting in place. Eco has three and a half years to drill on Cooper, providing us with ample time to put in place a new partnership prior to drilling. We are continuously in discussions with associates and partners in the region, so prior to drilling we intend to farm down part of the 57.5% interest which we now have.
“Tullow remains a fantastic partner for Eco in Guyana, where we are well advanced, with Total entering the block there most recently. The 2.9 billion barrels of oil equivalent that we have defined on the Orinduik block continues to advance with all of the Exxon discoveries, ongoing development drilling, and our continued interpretation of the extensive seismic data. We are extremely confident in what we have there and our selective and focused exploration approach, with two of the world’s best exploration teams from Tullow and Total working with us, the prospect of a new era for Eco Atlantic.”