Lisbon-based Galp makes a major oil discovery in Namibia

Written By Manuel Poças

The Portuguese company Galp announced on Sunday that it had discovered more than 10 thousand million oil barrels in Mopane, Namibia.

According to experts, considering the substance and the size of the finding, the company has two viable options. It can either sell the project, or explore it and sell the oil.

Given the uncertainty that is currently associated with the oil sector and exploration businesses, the latter would be riskier, but it would result in a long term increase of the company’s cash flow.

The first option, on the other hand, would allow the company to mitigate at least part of the risk associated with that uncertainty, and have a more immediate increase of cash flow, which could be redirected and leveraged to try and attain more growth.

In fact, the company can even sell part of the project (note that it owns 80% of it) and explore the rest. Regardless of the path that is chosen, it will definitely be beneficial for Galp.

Note that these values (10 thousand million barrels) are just an estimation, and that, according to Galp’s official communication to CMVM (the Portuguese Securities Market Commission), there is probably even more oil than that.

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