Woodside Energy Group (ASX:WDS) and Pancontinental Energy (ASX:PCL) have entered into an Option Deed granting Woodside an exclusive option to acquire a 56% Participating Interest in the PEL 87 exploration project in Namibia.

In exchange, Woodside will fully fund an estimated US$35M, a minimum 5,000 sq km 3D seismic survey, and pay Pancontinental US$1.5M in cash.

If Woodside exercises its option, Pancontinental will retain a 20% interest during the drilling of the first exploration well and have the option to either fund its 20% interest for the second well, or elect to have a 10% interest in the well carried by Woodside in exchange for transferring an additional 10% interest in the PEL 87 licence to Woodside.

Pancontinental can also convert its interest to a 1.5% overriding royalty interest on revenue derived from the sale of oil or gas produced from PEL 87.