" The offshore field in Sao Tomé has recently become a hotspot for oil companies eagerly awaiting the results of drilling on block 6. If drilling is successful, negotiations over block 4, contested by ERHC, Kosmos and TotalEnergies, may resume. Published 2022.
The results of the drilling of the Jaca well on block 6, offshore Sao Tomé and Principe, should be made public in the next few days. If the news is good, operator Shell and partner Galp will be able to reduce geological risks throughout this commercially untouched archipelago and exclusive economic zone. Block 4 may also profit from Shell's drilling. Kosmos Energy and TotalEnergies have had their eye on this block run by American junior ERHC for years.
As we revealed, in 2017, ERHC signed sales agreements for similar parts of this block, including the operatorship, first with Kosmos then with TotalEnergies (AI, 03/03/20). Both buyers took ERHC to court; Kosmos in the US and TotalEnergies in London. Both courts confirmed each company's rights on the block, but neither company has taken any steps to claim them. In 2020, Kosmos asked to suspend the confirmation procedure on the US sentence after partially pulling out of Sao Tomé - it sold blocks 6, 10, 11 and 13 and all of its assets in Namibia to Shell for $200m.
This move, a strategy also adopted by TotalEnergies, made their intentions unclear. As a result, the local regulatory authority, Agência Nacional do Petróleo de São Tomé e Príncipe (ANP-STP), run for the last three months by Luiz Manuel Gamboa da Silva, has no visibility on work that might be done on block 4. ERHC still owns the permit but does not have the means to drill, and neither TotalEnergies nor Kosmos Energy have produced their court ruling to negotiate with ANP-STP. If there is a major discovery on block 6, ANP-STP may require the three oil companies to come to the table and start working on the block straight away. Good climate for lesser-known areas
Crude oil prices have been on the rise since the beginning of the year, allowing oil companies to increase their exploration budgets in lesser-known areas, such as Sao Tomé and Principe. For some 20 years, the country has also shared a development zone with Nigeria. Despite the presence of majors since as Chevron and TotalEnergies, there have been no discoveries there."
The above describes the situation in 2022 and little has changed for STP and da Silva. In fact the prospect for another exploration well in the EEZ is probably worse now than it was in 2022.
Below is all conjecture on my part. Since we know so ittle factual information it frees us to imagine.
da Silva is in a situation where EEZ block 4 may be a better bet for a successful exploration than a second effort in block 6. The main players, Galp,Shell and Total all are planning to invest huge sums to develop their Namibian oil discoveries, and may feel the Namibian investment may make more financial sense than risking another drilling effort in the EEZ.
Kosmos may still have an interest in EEZ 4. Its financial situation may not allow it to make a large investment. Kosmos currently has more debt than market cap, a relatively high PE and PS for an oil co and stagnant net income. https://www.tradingview.com/symbols/NYSE-KOS/financials-overview/
The inaction in the EEZ by the majors may be the reason Sao Tome and Principa has allowed ERHC to remain in the game.
2 years post drilling EEZ block 6 with no action may have led daSilva to realize unless he attracts another major to drill an exploration well in Block 4 EEZ it may be a number of years before more drilling occurs .
Thus attracting another major such as the current Aramco rumor suggests is at least tenable in the absence of an official announcement. If I was in daSilva's place I would be trying to attract another major to drill the block.
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