Serica Energy plc has announced that, following a portfolio review, BP has decided not to exercise an option to increase its interest in Luderitz Basin licence 0047, offshore Namibia. The option, which expires at the end of 2013, required BP to drill a well on the licence before the end of 2015.

Accordingly, under the terms of Serica’s farm-out agreement with BP, BP will re-assign its 30% interest to Serica with effect from the end of 2013. From that date Serica will hold an interest of 85% in the licence with its partners National Petroleum Corporation of Namibia (Pty) Limited (NAMCOR) holding 10%, and Indigenous Energy (Pty) Limited holding 5%.

“With positive results from the 3D survey and recent third party drilling demonstrating the regional presence of both source rock and recovered oil samples, Serica believes that all of the necessary ingredients for significant oil accumulations are present in its licence area. The withdrawal of BP leaves Serica with a valuable and extensive data set and interpretation and provides the Company with an opportunity to attract new partners and to retain a larger percentage interest,” Serica said today in a press release.

Prospect evaluation

During 2012, Serica undertook an extensive 4,180 square kilometre 3D seismic survey covering approximately 25% of the licensed area, more than meeting its obligations under the licence. The survey undertaken by Serica, which cost approximately US$50 million including back costs fully funded by BP, was designed to delineate the size and nature of Prospect B, one of three large structures identified on the licence at Lower Cretaceous (Barremian) level, and to examine prospects at shallower level. The results of this survey, which is of high data quality, are positive.

The company said that processing of the data confirms Prospect B as having the clear characteristics of a large carbonate platform extending over 700 square kilometres with a vertical closure of up to 300 metres. An independent competent persons report by Netherland Sewell and Associates has estimated the gross prospective oil resource for Prospect B at 622 million barrels (best estimate case) with an associated risk of 16%. These estimates are in line with Serica’s own internal estimates. The expectation of a predominantly carbonate structure has been reinforced by third party drilling to the south which has proven the presence of large structures with associated carbonate build-up at Lower Cretaceous level.

According to Serica, the survey also confirms the presence of large submarine canyon-channel turbidite sand systems at both Lower and Upper Cretaceous levels. These, together with further leads and other large prospects on the licence, provide considerable additional potential. This is recognised in the Netherland Sewell and Associates report which gives a combined best estimate of gross unrisked prospective oil resources associated with 7 prospects and 2 leads identified on licence of 2,297 million barrels and 437 million barrels respectively.

Tony Craven Walker, Chairman and Interim CEO, said: “We appreciate the significant contribution that BP has made to the early stage exploration of our Luderitz blocks. The 3D survey which we undertook with them and which was fully funded by BP has clearly demonstrated the very real potential that exists on the blocks and which has been confirmed by independent reports.

We shall now progress discussions with other major companies who have expressed an interest to participate in the next stage, which will include the drilling of a well. We are excited about the prospects and, with the benefit of extensive 3D coverage providing clear evidence of the potential, we expect to be able to retain an increased position in the drilling phase.”