Africa Energy has signed a farm-out agreement with a subsidiary of Pancontinental Oil & Gas to buy a 10% participating interest in Petroleum Exploration License 37 offshore Namibia (PEL 37), reported Ecofin Agency.

Under the terms of the agreement, the company’s participating interest share of all joint venture costs, including the drilling of the first exploration well on PEL 37, will be fully carried through the current exploration period by a joint venture partner, informed Oil Voice. Upon finalization of the agreement, Africa Energy will pay Pancontinental $1.7m and another $4.8m after the drilling of the first exploration well.

The completion of this agreement is however subject to receipt of all necessary government approvals, other regulatory approvals, third party consents, partner approvals, as well as the completion of due diligence measures.

Africa Energy’s President and CEO, James Phillips, said: “The block contains a series of extensive base of slope fan prospects with significant combined resource potential. The fans directly overlie a mature oil-prone source rock of Aptian age, which was recently proven by the 2013 Murombe-1 and Wingat-1 wells in which the latter well recovered light oil. Africa Energy’s technical team has experience in these West African Cretaceous fan plays and we look forward to the drilling of a well in this play.”