Africa Energy Corp. (TSX Venture: AFE) (Nasdaq First North: AEC) ("Africa Energy" or the "Company"), an oil and gas company with exploration assets offshore South Africa and Namibia, is delighted to declare the execution of two farmout agreements whereby the Company will transfer an aggregate 62.5% participating interest in the Exploration Right for Block 2B offshore South Africa in consideration for a carry through the next exploration well, Gazania-1, which is expected to spud by the end of 2020. Africa Energy will retain a 27.5% participating interest in Block 2B.
Garrett Soden, Africa Energy's President and CEO, noted, "We are happy to farmout part of our interest in Block 2B and add a carried well to our very active and potentially transformational 2020 drilling program. Block 2B has the A-J1 oil discovery from 1988 in shallow water close to shore with significant contingent and prospective resources. The Gazania-1 well will target a relatively low-risk rift basin oil play up-dip from the discovery. We look forward to working with our new partners Azinam and Panoro to prove up more resource offshore South Africa."
Under the terms of a farmout agreement entered into with a subsidiary of Azinam Limited ("Azinam"), a wholly-owned subsidiary of Africa Energy will farmout a 50% participating interest and transfer operatorship in Block 2B to Azinam (the "Azinam Farmout Agreement"). In consideration for the assignment of this interest, Azinam will pay Africa Energy US$0.5 million at close and a disproportionate amount of the Gazania-1 exploration well and other joint venture costs. Azinam paid a US$1.5 million deposit to Africa Energy at signature of the Azinam Farmout Agreement and will place an additional amount into escrow at close to support its obligations under the Azinam Farmout Agreement. Azinam is a private Southern Africa-focused oil and gas exploration company backed by Seacrest Capital. Azinam is part of a group of upstream oil and gas companies with extensive operating experience, including drilling multiple wells in the North Sea.
Under the terms of a farmout agreement entered into with a subsidiary of Panoro Energy ASA ("Panoro"), a wholly-owned subsidiary of Africa Energy will farmout a 12.5% participating interest in Block 2B to Panoro (the "Panoro Farmout Agreement"). In consideration for the assignment of this interest, Panoro will pay a disproportionate amount of the Gazania-1 exploration well costs. Panoro is an Africa-focused independent oil and gas exploration and production company listed on the Oslo Stock Exchange.
Block 2B is located in the Orange Basin and covers 3,604 square kilometers off the west coast of South Africa 300 kilometers north of Cape Town with water depths ranging from 50 to 200 meters. Oil was discovered and tested by Soekor in the A-J1 borehole drilled in 1988. Thick reservoir sandstones were intersected between 2,985 meters and 3,350 meters. The well was tested and flowed 191 barrels of oil per day of 36 degree API oil from a 10 meter sandstone interval at about 3,250 meters. Significant prospectivity has been identified over the entire A-J graben area using 686 square kilometers of 3D seismic data from 2013.
Africa Energy currently holds a 90% participating interest and is the operator of Block 2B. Crown Energy AB indirectly holds the remaining 10% participating interest. Closing of the farmout transactions is subject to standard conditions for a transaction of this type, including approval by the South African government.