By: Energy capital & power

Shell has commenced drilling of the Merlin-1X exploration well on Petroleum Exploration License (PEL 39) in Namibia’s Orange Basin, marking its return to offshore operations in the country after a $400 million write-down in 2025 linked to earlier discoveries deemed commercially challenging.

The well is part of Shell’s broader exploration campaign in Namibia, which has included multiple high-impact wells across the basin since 2022, including Graff, Jonker, Lesedi, Cullinan and Enigma. Merlin-1X therefore represents not only another exploration attempt, but also a test of the commercial potential of Shell’s remaining prospect inventory in the country.

Drilled in water depths of approximately 2,500 meters to a planned total depth of around 4,500 meters using a deepwater semi-submersible rig, operations are expected to last roughly 45 days. The outcome will be closely watched across the industry as a near-term indicator of how operators are recalibrating risk in one of the world’s most active frontier exploration provinces.

A commercial discovery would reinforce the Orange Basin’s position as a multi-cycle exploration province, potentially accelerating farm-in activity, drawing in additional long-term capital and supporting a faster transition toward development planning across adjacent discoveries. For Namibia, it would further strengthen expectations around first oil toward 2030 and underpin infrastructure buildout across emerging offshore corridors.

Investors Target Near-Discovery Acreage

The Orange Basin has moved into a phase where capital allocation is increasingly differentiated between core discovery clusters and surrounding acreage positioned for future tiebacks and expansion.

This is reflected in new upstream positioning across the basin, including Oregen Energy’s non-binding LOI to evaluate investment in Petrovena, which has been awarded rights over Block 2812Ab in the Orange Basin. The block sits immediately northwest of Block 2913B (PEL 56), home to TotalEnergies’ Venus discovery, where a final investment decision is targeted for 2026. The transaction would expand Oregen’s exposure to the Venus fairway, alongside its existing interest in PEL 107, reinforcing a broader trend of investors building positions around proven hydrocarbon corridors rather than purely frontier acreage.

Even in the event of a weaker result at Merlin-1X, broader basin momentum is unlikely to slow. Independent operators including Chevron, Petrobras, Eco Atlantic, Sintana Energy and Pancontinental Energy continue to expand exposure through farm-ins and new acreage entry, reflecting sustained appetite for long-cycle offshore developments despite exploration variability.

New Discoveries Reinforce Wider Basin Interest

Recent activity has further reinforced this layered investment environment. Rhino Resources’ Volans-1X success in PEL 85 underscored continued prospectivity across underexplored areas of the basin, while appraisal and development progress at TotalEnergies’ Venus project and Galp’s Mopane discovery continues to anchor long-term development expectations.

Beyond the main Orange Basin fairway, emerging exploration activity across the Kavango and Lüderitz basins adds additional upside potential, supported by Namibia’s ongoing efforts to open new frontier acreage and diversify its offshore exploration portfolio.

Merlin-1X sits at the intersection of two dynamics: frontier drilling uncertainty and increasingly structured capital allocation around established discovery clusters. The result will help shape not only Shell’s next steps in the basin, but also the pace and direction of investment across one of the most closely watched offshore exploration regions globally.