In its first overseas acquisition,
Cairn India on Thursday bought 60 per cent interest in a deep-sea gas discovery block on the west coast of South Africa.
Anil Agarwal-controlled
Cairn India signed a farm-in agreement with South African national oil firm Petroleum Oil and Gas Corporation of South Africa Ltd (PetroSA) to take 60 per cent interest in 19,922 square kilometre Block 1 in the Orange Basin.
While the company will not make any upfront payment, it will carry PetroSA during the initial exploration phase (ie fund the South African firm's share of cost).
Since delivering the giant Rajasthan oil discovery, Cairn was awarded a frontier basin block in Sri Lanka where it made gas discoveries in two out of the three wells drilled so far.
Cairn is producing 175,000 barrels per day of oil from Rajasthan block where it sees a potential of 300,000 bpd.
Flush with cash, the company had been for sometime now
on the prowl for overseas acquisition and zeroed in on Block 1 where PetroSA held 100 per cent interest.
Cairn was able to get operatorship of the block along with majority 60 per cent stake. PetroSA had drilled two wells on the block so far, one of which yielded a gas discovery.
After the acquisition, the company plans to do a seismic survey in the next weather window early next and then would drill one well on the block.
"The closure of the transaction is subject to South African regulatory approvals," the company said in a statement.
Cairn said Block 1 is in the initial stages of exploration. It has an existing gas discovery and identified oil and gas leads and prospects.
Located in the geologically-proven Orange Basin along the north-western maritime border of South Africa with Namibia, the block is on trend with the discovered Kudu and Ibhubesi gas fields.
"Cairn India will hold a 60 per cent interest in the block, through a wholly-owned South African subsidiary, and will be the Operator, with PetroSA holding the remaining interest," the statement said.
The acquisition, it said, is "a step forward in achieving Cairn India's strategic goal of growing its resource base by acquiring exploration and appraisal assets outside the Indian sub-continent."
The Orange Basin is an emerging hydrocarbon province with potential for material oil and gas discoveries. Block 1 will be an anchor exploration asset in South Africa and will augment Cairn India's existing portfolio.
Everton September, PetroSA Vice President for New Ventures, said: "Cairn India brings with it extensive geo-technical and operating capabilities that will combine very well with our experience and understanding of the region.
We have a shared mindset, and together are extremely well placed to realise the full potential of Block 1."
P Elango, Cairn India Director for Strategy said: "This is an important first step for the company's growth beyond the Indian sub-continent. We see an attractive opportunity to leverage our capabilities in a rapidly-emerging area and aspire to build a wider business in the region."
Block 1 is a large block of 19,922 square kilometre, with water depths ranging from 100 meters to 900 meters, and is located in the Orange Basin on the north western border between South Africa and Namibia.
The Orange Basin is a large Cretaceous Deltaic Basin with multiple proven source rocks and is lightly explored. PetroSA acquired a 1500 sq km 3D seismic survey in 2009.
With PTI inputs
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