Galp explains dilution in Mopane well

Galp Energia says it will not be able to bring its mega 10-billion-barrel Mopane well into development, and sees share dilution as the preferred manner to develop other projects it has on its hands.

The company is looking to sell half its stake in the Mopane well.

The comments were made by CEO Filipe Silva, who said despite the discovery's size, Galp would have preferred to go the development route with partners who are willing to share in the costs. “Any stake dilution, the capital expenditure, this is going to be a multiple Fully Diluted Shares Outstanding [FDSO] development, so it is beyond the financial means of Galp to keep 80%. Actually, we have 100% as we are carrying the local partners,” he said of the energy corporation's future plans in an investor call.

Galp currently holds a 80% stake in the mega discovery, together with the National Petroleum Corporation of Namibia (Namcor) which holds 10%, and Custos Energy, which holds the other 10%.

Galp would still be involved in exploration and appraisal activities in the parts of its Mopane discovery it is not selling to major oil producers, it said.

“We don’t want to comment on the potential dilution. The focus at Galp is to de-risk what we have in our hands." According to Silva, first oil production is expected at the end of this decade if early production is in place.

Reuters reported that Galp hired Bank of America to run the sale process, which could raise several billion dollars for the company, although the exact value is unclear, the sources said. Bank of America declined to comment.

Galp’s discovery follows recent exploration campaigns in the same area by TotalEnergies and Shell.