GGE’s ASX peer running. A super major discovery with an 11,000 barrel of oil per day flow rate….

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 101,981,879 GGE Shares and 6,172,030 GGE Options, and the Company’s staff own 5,000,000 Shares at the time of publishing this article. The Company has been engaged by GGE to share our commentary on the progress of our Investment in GGE over time.

11,000 barrels of oil per day....

Two weeks ago, energy supermajor BP declared the latest oil discovery offshore in Namibia:

(Source)

Off the back of that news, the market started buying back up into juniors with acreage offshore in Namibia.

Pancontintental Energy is up over 60% this week and is now trading with a market cap of ~$90M.

The past performance is not and should not be taken as an indication of future performance. Caution should be exercised in assessing past performance. This product, like all other financial products, is subject to market forces and unpredictable events that may adversely affect future performance.

And all of this happened in a week where the oil price actually went down...

(Imagine how the market would have reacted if the oil price was running)

BP’s recent result just adds to the wave of successful offshore oil discoveries in Namibia in recent years - over 11 billion barrels have been discovered so far.

By early 2025, after drilling 17 exploration wells and 6 appraisal wells since 2022, the success rate in Namibia's offshore Orange Basin is over 80%.

No wonder there’s at least another half dozen wells planned in 2025 alone to add to the most recent discovery.

We think the latest news out of Namibia can only be good for our micro cap Investment Grand Gulf Energy (ASX:GGE).

GGE recently acquired an option on a 70% working interest in a Petroleum Exploration License over an offshore block in Namibia, in the Walvis Basin.

This block already has a mean prospective resource of 1.1 billion barrels of oil.

That resource is based on ~6,100 km2 of 3D seismic and 4,700 line km of 2D seismic data.

The Walvis Basin (where GGE’s prospective block sits), shares the same source rocks as the Orange Basin (where all those recent discoveries were made)...

AND we are now starting to see the majors turn their interest to the Walvis - supermajor Chevron sidled into the Walvis near GGE recently.

Right now GGE’s exploration license is at the application stage. The government has confirmed the receipt and registration of the application.

GGE has entered the Walvis Basin via a low cost option, and we think in the coming months we should know if the exploration license gets granted or not.

We think the market could start to re-rate GGE IF/when the application for an exploration license is approved.

Right now, GGE is capped at just $5.6M.

GGE’s offshore Namibian peer, Pancontinental, is capped ~16x higher at ~$90M.

Of course, the large valuation gap would be expected given Pancontinental is at a more advanced stage, especially with its project being a granted exploration permit versus GGE’s which is currently in the application stage.

But that might change over the coming months if GGE can get a few wins...

We Increased our position in GGE in the recent 0.2c cap raise for three main reasons:

1. We like GGE’s move into “swing for the fences” exploration - We like Investing in high risk, high reward swing for the fences exploration.
2. GGE now has Havoc Services (led by Dr Alan Stein) as its technical advisors - Havoc’s track record includes discovering 2 billion barrels of oil and raising more than US$1BN in capital. They also know Namibia really well - they operated PEL 90 which was sold to Chevron in 2022.

Havoc is supporting GGE in the identification and evaluation of “additional frontier basin opportunities globally” - so we may yet see some more exploration assets come GGE’s way.

We think they must have some pretty good industry networks given their experience and success.

(Source)

1. GGE’s market cap (at 0.2c) is ~$5.6M - GGE has a tiny market cap which we think can re-rate in a big way leading up to and after a big drilling event (assuming the results are good).

Our early stage bet for GGE is in line with the approach we typically take when Investing in oil and gas explorers. That plan is usually to:

• Invest early, as the company is in the early exploration work stage - GGE is currently capped at <$6M and is still at the application stage with its exploration license.
• Increase our Investment, as the company de-risks the project through permitting, geophysics and target generation - we hope this happens at a higher valuation post-permitting.
• Top Slice, if the share price runs in anticipation of exploration results - this is usually leading up to the drill program where we would again expect a company's valuation to be higher than when we first Invested.
• Free Carry, into results while still maintaining a large position to be leveraged for a discovery - this is usually just as drilling starts..
• Evaluate our position post-drilling.

Our theory is that as a small cap oil and gas explorer gets closer to a drilling program, market interest in that company increases.

It usually looks something like this:

It’s important to note that increased excitement/interest shown on our chart below does NOT necessarily correlate to share price increases, which depends on many other factors and broader market conditions.

IF the macro sentiment is strong and there is good news coming out of that region... then we would also hope that the share price is tracking higher than our Initial Entry Price.

Here is where we think GGE is right now:

It’s important to note that increased excitement/interest shown on our chart below does NOT necessarily correlate to share price increases, which depends on many other factors and broader market conditions.

GGE does have an edge on the interest/excitement axis though, in that there are over seven wells planned for drilling in offshore Namibia during 2025-2026.

Any new major discoveries could bring even more attention to the pre-drill small cap explorers like GGE in the region.

Like ~$90M Pancontinental and our Investment $5.6M GGE.

Where is GGE’s project relative to the mega discoveries in Namibia?

More than 11 billion barrels of oil have been discovered offshore in Namibia over the last ~ three years.

In 2022 Shell opened up offshore Namibia with a 5BN barrel discovery.

Then TotalEnergies followed up with an 11BN barrel discovery - one of the biggest made in over 20 years.

Then in 2024, Portuguese giant Galp hit another 11BN barrel discovery...

Those three discoveries alone made up more oil reserves than Guyana (the world’s third biggest oil producing nation).

(Source)

All of those discoveries (including BP’s that we mentioned earlier) were made in the “Orange Basin”, off the coast in Namibia.

GGE’s project is in the Walvis Basin which is to the north of the Orange Basin in Namibia.

The Walvis Basin has the same source rocks as the Orange Basin, where billions of barrels have been discovered.

Here is where the Walvis Basin sits relative to the Orange Basin:

So far most of the activity in Namibia has been focussed in and around the Orange Basin (for obvious reasons), but we are seeing the major operators slowly start to move north with their planned wells.

Eventually, as the discoveries in the Orange Basin are put into production and infrastructure is built out, that area will become more mature for exploration.

That’s when we expect the big capital shift to underexplored parts of offshore Namibia - like the Walvis Basin.

We have already seen this happen right next door to GGE.

Chevron entered PEL 82 just a few months ago, and it sits just north of GGE’s (pending) block.

Chevron is ‘considering’ drilling an offshore well here in 2026 or 2027.

(Source - Offshore Technology)

Here is where Chevron's farm in sits relative to GGE’s application:

An interesting thing to note - that well inside Chevron’s block (“Wingat-1”, where the arrow is pointing in the image above) was drilled in 2013 by the previous operator of the block - Galp.

Wingat-1 actually drilled into “TWO source rocks” that were inside the “oil generation window”.

Here were some comments from Portuguese giant Galp on the results back in 2013:

“The fact that the source rock is in the oil window and generating liquid hydrocarbons of excellent quality confirms the source potential of the basin”

AND

“As such, the results of Wingat-1 well provide important information that will help calibrating the next exploration steps in the Walvis Basin”

(Source)

So Galp got close to finding something...

But before any more work could be done in the Walvis, all of the attention offshore in Namibia turned to the lower hanging fruit in the Orange Basin...

Things are slowly changing, though, as the easy pickings in the Orange Basin are drilled...

As we mentioned above, Chevron plans to drill a well on its Walvis block near GGE in 2026-2027... which we hope coincides with increased activity by GGE on its block (assuming the exploration license is granted).

This map from 2023 also shows how, after those major discoveries in the Orange Basin, the planned wells are slowly starting to shift towards the north (into the Walvis Basin where GGE is).

(Source)

Our view is that as more capital and expertise flocks into Namibia, the value of ground in this part of the world will increase simply because of how close it will be to big operating assets with huge sunk costs into infrastructure.

The history of GGE’s (pending) block

The block GGE has an exploration license pending over has already had some work done on it, which is helpful.

The block was previously held by London listed Chariot Energy.

Chariot ran seismic surveys (6,100km2 of 3D and 1,700km of 2D data) and drilled an exploration well in 2018.

The exploration well hit "reservoirs with clear seismic signatures”, but no official discovery was declared.

Chariot’s well cost ~US$16M, which isn't that much considering this is an offshore well.

Here is what Chariot’s CEO had to say about the results of that well at the time:

(Source - Chariot Announcement 2018)

Off the back of that drill program, Chariot went into a quiet period and eventually in 2021 the company relinquished the block...

That was ~12 months before the mega discoveries offshore in Namibia started happening and Namibia became an oil exploration hotspot.

Ouch...

... but great news for GGE who has been able to pick this asset up cheaply and run with it again...

Here is a brief overview of the order of events:

Now that GGE is looking to secure the project, we are hoping that it will have more drill success than the previous owners of the block.

(and the dreaded oil & gas “not a discovery but a ‘technical success’ that we can learn from for our next well” has already happened on somebody else's coin)

Discovery success can and does happen with more data and a different team.

And recent discoveries mean the market is now very interested in drilling for huge discoveries offshore in Namibia (which means more capital to drill is now available).

Given all the work done on the block so far, the project still has a 1.1BN barrel prospective resource across three of the bigger remaining undrilled targets:

Here is the target that has been drilled (Prospect S) and the ones that haven't (the other letters):

What do we want to see next?

• Conversion of application to a granted license

Next for GGE’s acquisition, we want to see the exploration license application granted.

In the meantime, check out our last note on GGE where we do a deep dive on:

• Why Namibia is the place to be for oil exploration right now
• How Namibia could become the next “Guyana” (or better)
• What GGE is paying for the asset

What are the risks?

In the short term the key risk for GGE will be “permitting risk”.

There is no guarantee that GGE’s application will be converted into a granted exploration licence.

GGE has previously said the application had only been acknowledged by the Namibian regulators and that the application had not yet been “evaluated”.

There is always a risk the application is rejected and GGE fails to get control of the project.

If that were to happen we would expect GGE’s share price to react negatively to the news.

As a result this will be the key risk to our Investment in the short term.