BP to farm-in to Serica’s Luderitz Basin Blocks, offshore Namibia

Serica Energy plc announces that, subject to the consent of the Ministry of Mines and Energy in Namibia, BP will be joining Serica in the exploration of Licence 0047 offshore Namibia by farming-in to Serica’s interest.

The Licence, comprising Blocks 2512A, 2513A, 2513B and 2612A (part), was recently awarded to Serica Energy Namibia B.V. (a wholly owned  subsidiary of Serica)  and covers an area of approximately 17,400 square kilometres in the deep water central Luderitz Basin.  Serica  currently  has an 85% interest in the blocks.  Its partners are the National Petroleum Corporation of Namibia (Pty) Limited  (“NAMCOR”) (10%) and Indigenous Energy (Pty) Limited (“IEPL”) (5%).  Both NAMCOR's and IEPL's interests are carried by Serica for prescribed work programmes.

Under the transaction, BP will pay to Serica a sum covering Serica’s past costs and earn a 30% interest in the Licence by meeting the full cost of an extensive 3D seismic survey.  As a result of the farm-out, Serica's interest in the Licence following completion of the seismic survey will be 55%.   Serica has also announced today that it has signed a contract with Polarcus Seismic Limited to acquire up to 4,150 square kilometres of
3D seismic across the Licence.

The deep water geological basins offshore Namibia, including the Luderitz Basin,  are at  the  early  frontier stage of exploration.  Although the presence of very large structures have been shown to exist from seismic surveys, very few wells have been drilled in the deeper water Namibian basins to date and the full hydrocarbon potential of the area has not yet been fully tested.   Water depths in Serica's Luderitz Basin blocks range from  300 to 3,000 metres.  Drilling in these depths of water, whilst becoming  more commonplace in the industry, requires sophisticated drilling techniques and equipment and is very costly.

Serica has therefore granted an option for BP to increase its interest in the Licence by meeting the full cost of drilling and testing an exploration well to the Barremian level before the end of the first four year exploration period.  In the event that this option is exercised, Serica's interest in the Licence will be 17.5% carried through the first well, which will have very considerable value if the exploration drilling is successful.

Serica will continue to be the operator of the Licence during the initial seismic period with BP taking over as operator if it exercises its option to drill and test a well.

Source: Serica Energy