Sintana Energy has signed a letter of intent (LoI) to potentially acquire an indirect interest in Petroleum Exploration Licence (PEL) 37, an offshore block in Namibia's Walvis basin. The block is operated by Paragon Oil & Gas, which currently holds a 100% stake.

Exclusivity and Due Diligence

The LoI grants Sintana an exclusivity period until 30 April to conduct technical, commercial, and legal due diligence on both Paragon and the licence. During this time, Sintana will also negotiate its capital contribution to meet the licence's work obligations, which would result in it becoming a shareholder of Paragon and thus an indirect holder of an interest in PEL 37. A $1 million deposit secures this exclusivity, with one-third being non-refundable if the deal does not proceed.

Strategic Location and Geology

PEL 37 covers 17,295 square kilometres in water depths of 100 to 1500 metres and is located directly north of Chevron-operated PEL 82. Sintana has an existing connection to the adjacent block through its indirect affiliate, Custos Energy, which holds a working interest in PEL 82 and is carried for an initial exploration well planned for this year. Identified prospects in PEL 37 lie in 300 to 600 metres of water and feature multiple large fans directly overlying a proven, mature oil-prone Aptian source rock.

Strategic Rationale

The move is described as building out Sintana's position in the Walvis basin. The company is already targeting drilling in the adjacent PEL 82 on prospects that benefit from the same proven source rock. Therefore, a stake in PEL 37 is seen as a sensible extension of existing exploration themes, with potential for positive read-across from any exploration drilling results on the neighbouring Chevron-operated block.