The success bonuses are payable in two equal tranches being on the grant of a production licence and on the commencement of commercial production.
Both Calima and Tullow have agreed to a 60-day exclusivity period to satisfy due diligence, reach a formal sale and purchase agreement and secure Namibian Government and partner approvals.
Proceeds from the sale will be used to advance the company’s core Montney project in Canada.
Calima picked up the 5,433 square kilometre PEL 90 (Block 2813B) in the Orange River Basin off southern Namibia in May last year, following a surge of investment into the country from the likes of ExxonMobil, Total and India’s ONGC.
Work by the company indicated that the source rocks encountered by the nearby Moosehead-1 well drilled by Brazil’s HRT, should also be present and mature over a significant part of its block.
This work also found that several potential reservoir sequences appeared to be present.
Highlighting the interest in the waters off Namibia for oil and gas exploration, ExxonMobil acquired four deepwater blocks covering a total area of 28,000 square kilometres to the north in April and flagged its plan to start exploration this year.
French supermajor Total is also planning to drill its ultra-deepwater Venus-1 well off southern Namibia, targeting up to 2 billion barrels of oil later this year.
“With recent drilling success in the Montney, this transaction allows us to focus capital allocation towards Canada while maintaining financial leverage to exploration success in Namibia,” Calima Managing Director Alan Stein said.
“The Namibian block is a world-class exploration play with extraordinary upside but it will require considerable investment and time to reach the point of exploration drilling.”
“The Montney offers our shareholders a significant value proposition in the short term where the company can now put in place the building blocks of a world-class development with modest capital investment.”
In April, Calima said that analysis of gas samples produced from its horizontal wells in British Columbia’s Montney formation confirmed that high-value condensates, or light oil, makes up 70 percent of the recovered liquids.
This is on par with the gas compositions of adjacent wells drilled by Saguaro Resources and is a boon to the company as light oil is generally priced at, or close to, the West Texas Intermediate crude oil benchmark.
It recorded a calculated condensate gas ratio of 40.12 barrels of liquids per million cubic feet of gas during the final eight hours of production testing at the Calima-2 horizontal well.
Calima’s sale of its Namibian offshore licence is a tidy way to bulk up the war chest for its core Montney operations in Canada while retaining exposure to any exploration upside that Tullow Oil might be able to deliver.
That the upfront payment of N$28.9 million is nearly double the N$14.5 million that the company paid to acquire its stake in the project back in 2018, is just the cherry on top of an already lucrative deal.-the westaustralian