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TotalEnergies' hugediscovery pushes up bidding on Venus

The Orange Basin, home to two of the largest crudeoil discoveries in Africa in recent decades, is currently the focus of intensecompetition that could lead to record-breaking deals.

Issue dated 24/05/2022 Reading time 2 minutes

TotalEnergies' February discovery of the Namibian Venus field is expected to be the largest ever off the African coast since exploration began in sub-Saharan Africa in the 1950s. Confidential reports from specialist firms such as Wood Mackenzie and IHS Markit suggest that 10 and 12 billion barrels will be recoverable from this site in Block 2913B (Orange Basin), at a depth of more than 3,000m. In order to speed up the development process, TotalEnergies has agreed to drill two appraisal wells in September and a new exploration well by the end of this year. At around $100m per well, the project is expected to cost around $300m.

Spotting an opportunity to raise a large amount ofmoney quickly, Impact Energy is looking to divest its 20% stake in the block. In any event, it would not be easy for Impact to raise its share of the future wells ($60m) in a short period of time. Impact is majority owned by Hosken Consolidated Investments (HCI), the South African conglomerate of Johnny Copeland, a former African National Congress (ANC) MP and billionaire. The latter has been pushing hard for this sale. The rest of the junior's capital is owned by Africa Oil (30%), as well as current and former Impact Oil executives.

Who isin charge of the sale?

According to our sources, Impact hopes toobtain $1.5bn to $2bn for its shares, or $450m to $600m forAfrica Oil in dividends. The investment bank Jefferies was chosen by Impact to find a client for its Namibian holdings. The company won the contract in a hard-fought battle, even though many other banks were in the running: Evercore, Goldman Sachs, Tudor, Pickering, Holt & Co (a subsidiary of Perella Weinberg Partners, one of whose partners, Geraldine Murphy, was a member of Impact's board) and Kirk Lovegrove & Co.

This sale could be of interest to several companiessuch as TotalEnergies (if its right of first refusal is used) and Shell (operator of the 2913A licence adjacent to Impact's licence where the recent Graff discovery was made). QatarEnergy is also involved in both TotalEnergies' and Shell's blocks.

The challenge for Jefferies is to match, if notexceed, the success of the record sale of Cove Energy's (of former Shell man Michael Blaha) 8.5% stake in Mozambique's Block 1 to Thailand's PTTEP. The deal was concluded in 2012 with the payout of $1.9bn. Huge quantities of gas had been discovered on Block 1, which has been in the hands of TotalEnergies since the purchase of Anadarko's shares in 2019.