TotalEnergies and Africa Oil have decided to withdraw from Blocks 10BB, 13T and 10BA in Kenya’s South Lokichar Basin.
Tullow Oil said its subsidiary, Tullow Kenya, which is the operator of its Kenya licences, would increase the working interest in the blocks from 50 to 100 per cent.
The company added that the partners withdrew from the South Lokichar Basin project due to “various internal strategic reasons”.
Tullow is optimistic about the decision by TotalEnergies and Africa Oil as it believes that “owning 100 percent of the project creates more optionality, gives Tullow more flexibility in the ongoing process to secure strategic partners, creates a partnership of joint venture simpler and streamlines the execution of the project.”.
It added that potential strategic partners for the development of the project had been informed and that they “remain engaged” and that “detailed discussions continue with various companies”.
Tullow acknowledged the process has taken longer than expected but remains optimistic it can secure a strategic partnership by 2023.
The company noted that progress on the project continues. The updated Field Development Plan (FDP) was submitted to the Kenya regulator in March 2023 and is currently under review.
Following the withdrawal of the minority partners, Tullow’s 2C project net contingent resources are expected to increase from 231 mmboe to 461 mmboe, taking the company’s total contingent resources from 605 mmboe to 836 mmboe. Net capex guidance for 2023 in Kenya will rise from about $10 million to about $15 million, less than five percent of the company’s investments.
In a separate statement, Africa Oil said the withdrawal was unconditional and irrevocable and asked the Kenyan Ministry of Energy and Petroleum to transfer all its rights and obligations under the PSCs to Tullow.
According to Africa Oil, the carrying value of Kenya’s exploration intangible assets was reduced to $58.6 million as of December 31, 2022, and the company will further write down this value to zero.
“We have made the decision to exit our concessions in Kenya as our strategy has shifted to focus on high-potential production and exploration opportunities, including our portfolio in the Orange, where we are now evaluating the exciting Venus discovery, off the coast of Namibia,” said the Africa Oil President and CEO. Keith Hill said.
“Africa Oil is proud to have played a central role in the discovery of oil deposits in the Lokichar Basin of Southern Kenya. We continue to believe that these discoveries will form the basis of a major oil producing province in the coming years with a strategic asset to the country,” Hill added.
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