Custos cashes out, keeps upside
Custos Energy has agreed to transfer its 10% participating interest in petroleum exploration licence 90 (PEL 90) to Chevron for US$11 million (about N$182 million) in cash, while retaining potential upside if the licence advances to commercial production.
The deal, announced by Custos on Thursday last week, involves its wholly owned subsidiary Trago Energy and Harmattan Energy, a Chevron Corporation affiliate.
Trago will receive the US$11 million when the transaction completes, as well as further contingent payments linked to appraisal and production milestones.
The agreement also provides for payments associated with commercial production, currently estimated at between 1.5 million and 2.5 million barrels of oil, depending on oil price assumptions.
The transaction is subject to government, regulatory and third-party approvals.
The deal means Custos will give up its 10% participating interest but will also no longer be responsible for its share of future exploration and development costs on PEL 90.
The licence is preparing for the Nabba-1X exploration well, making the transaction a way for Custos to reduce its exposure to the potentially significant costs and risks associated with further exploration.
Custos chairman and chief executive Knowledge Katti said the company had been involved in PEL 90 since it was awarded in 2018 and had helped bring Chevron into the licence in 2022.
“This transaction allows us to continue our exposure to the very bright future ahead, but in a more capital and risk efficient manner,” he said.
Chevron is the operator of PEL 90, which has also attracted QatarEnergy and Equinor as partners.
Custos said the transaction would allow it to maintain exposure to the licence's potential without having to fund its participating interest.
Once the deal is completed, the company will contribute N$10 million through the Knowledge Katti Foundation to the University of Namibia Foundation towards the construction of UNAM's new campus in Walvis Bay.
Katti said the contribution reflected the foundation's focus on education and its support for more than 120 Namibian students.
“Namibia’s greatest resource is its young people,” he said.
