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Namibia is again under the spotlight as Shell bank on the highly
anticipated Graff-1 to unlock frontier plays in the Orange
Sub-basin. The deepwater exploration well was spud by the Valaris
DS-10 drillship just days after Venus-1, the TotalEnergies operated
wildcat in the neighbouring PEL 56 licence. Shell have indicated
the success of Graff is independent of Venus, targeting shallower
plays within the major delta system. If successful, Graff-1 could
spark significant international investment to a region which has
had minimal E&P activity over the last 25 years.
However, success at a geological level does not imply economic
or commercial success. Analysis of the Graff prospect suggests a
minimum economic field size of around 85 MMbbls at $70/bbl and a
potential NPV of around USD 1.5 billion with a discovery size equal
to 320 MMbbls. Cost curve analysis indicates an average BEP price
for new projects offshore West Africa of $50/bbl. With this as a
minimum long term price expectation, Shell is likely targeting at
least 210 MMbbls recoverable. It is also worth noting that there is
additional upside potential with several key prospects already
identified nearby.
