The oil company’s CEO revealed to analysts that “the capital necessary for investment in the development of the Namibian project will be financed by our new partner”, without saying whether or not this partnership has already been decided and without mentioning company names.
Galp’s CEO assured this Tuesday in a telephone conversation with analysts, following the presentation of results for the first quarter of 2024, that “Galp will maintain a high stake” in the ongoing oil exploration project in the Mopane region, off the coast of Namibia. Having completed the first phase of exploration at the site, the oil company will now continue to carry out work on the ground, with four more holes planned, taking into account that “there are other areas with potential in that area”.
Fliipe Silva also added that future Namibian oil revenues should not be absorbed by the company’s investment in that geography, but rather allow Galp to finance its downstream transformation and “accelerate ongoing energy transition projects”such as the decarbonization of the Sines refinery, the production of low-carbon fuels, hydrogen and lithium.
O The person responsible did not confirm the news already announced, which states that the oil company intends to sell half (40%) of the 80% majority stake it holds in the consortium., which also includes the Namibian state-owned Namcor (10%) and Custos Energy (10%). However, Filipe Silva confirmed to analysts that “the capital required for investment in the development of the Namibia project will be financed by our new partner”, which should happen “at the end of 2024, beginning of 2025”. The CEO did not reveal whether or not this partnership has already been decided and without mentioning company names. Regarding a potential entry into production, he spoke of the “end of the decade”, saying that “it is still too early to make predictions”.
“The investment in drilling the two wells was lower than we expected. For now, the ‘capex’ requirements are light and future financing is not expected to be provided by Galp. Therefore we will reduce our participation from 80% to a lower percentage”he said.
As for the estimated reserves of 10 billion barrels of oil equivalent in the region, the official said that these are the best predictions based on the information collected so far from the two wells already drilled. “The results of the tests were very impressive. But we are a conservative company and we will calibrate the commercial model based on what we have already been able to prove. Are there risks? That’s why we will do more exploration to analyze the Mopane area even better. , revealing that the oil company purposely chose not to carry out the first drillings in places with the greatest potential (the so-called ‘sweet spots’, as the CEO told analysts). The two wells already drilled, where Galp reported having discovered oil, are located 8 km apart, and the company admits that a “potential connection” could be made between them. Regarding investment in this exploration phase, Galp already allocated 117 million euros last year and plans to spend another 150 million this year.
The CEO did not identify major obstacles or challenges in Galp’s oil project for Namibia, saying that it is a “incredibly stable country” with collaborative authorities. “We are satisfied with the country as a whole”concluded Filipe Silva.
Galp closed the first quarter of this year with “adjusted replacement cost” (RCA) profits of 337 million euros, an increase of 35% compared to the 250 million obtained in the same period of 2023, indicated this Tuesday the company led by Filipe Silva in a statement to the CMVM. Turnover fell 1%, reaching 5,075 million euros, while earnings before interest, taxes, amortization and depreciation (EBITDA) grew 13%, reaching 974 million euros. “The first quarter of 2024 was good for Galp. In Namibia, we made progress and together with our partners We were able to reduce the risks associated with the project. The test results so far have been very impressive and exceeded all expectations, revealing the potential of the region. We are confident that Namibia will allow Galp to grow in the future”, Filipe Silva told analysts, revealing the launch of a new phase of exploration and evaluation on the ground.
In terms of investment, the company generated 311 million euros until March, 81% more than a year before. Galp details that the majority of this amount was channeled to the production and exploration segment (“upstream”), in particular to oil in Brazil and exploratory work in Namibia.
“In Namibia, our efforts have revealed exciting opportunities that will support future growth ambitions. We have completed the first exploration campaign, which has helped reduce risks in relation to the Mopane area. In this first quarter, Galp successfully drilled two wells where significant columns of light oil were identified. However, we have also completed a first test that has revealed encouraging results. The quality and size of the resources found, as well as the test results obtained to date, indicate that. we may be in the presence of major commercial discoveries. We will now be focusing on the upcoming exploration activities and more comprehensive assessment of the Mopane complex.”highlighted the CFO, Maria João Carioca, in the video that accompanied the results presentation.
