88 Energy has signed an agreement to earn a 45% stake in onshore petroleum exploration licence 93 (PEL 93) in the Owambo Basin, Namibia, from Namibian company Monitor Oil and Gas Exploration (Namibia) (MELN), a wholly owned subsidiary of Monitor Exploration.

Under the three-stage farm-in agreement, 88 Energy’s wholly owned subsidiary 88 Energy (Namibia) (88EN) will initially make a payment of $3.7m (A$5.8m) to MELN, over four instalments, for a total of a 20% stake in PEL 93.

In the second stage, 88 Energy will make a $7.5m payment towards the first well gross cost, estimated at $12m, to receive an additional stake of 17.5%.

88 Energy, in the third stage, will have the option to fund $7.5m of the second well gross cost to earn an additional 7.5% stake in the licence. This will bring 88 Energy’s aggregate stake in the licence to 45%.

MELN will receive a gross royalty of 2% of the revenues produced from the licence.

The agreement is subject to Namibian Government and other regulatory approvals.

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88 Energy managing director Ashley Gilbert said: “The execution of this farm-in agreement with Monitor provides 88 Energy and its shareholders with a fantastic opportunity to earn a significant working interest in a very large scale, highly prospective, under-explored acreage position on attractive and logically staged commercial terms.

“Monitor has completed a systematic historical work-program that has identified significant large-scale, untested prospects. The licence includes an extensive lead portfolio, which will provide an increased level of activity and value catalysts throughout the year.”

Covering an area of 18,500km², PEL 93 comprises blocks 1717 and 1817.

Currently, MELN owns a 75% stake in PEL 93, and serves as operator of its exploration and development.

Legend Oil Namibia owns a 15% stake in the licence while Namibian Government entity National Petroleum Corporation of Namibia owns the remaining 10% stake.