PERTH (miningweekly.com) – Oil and gas developer Cairn Energy has struck a deal with Russian producer LukOil to divest of its 40% interest in the Rufisque offshore, Sangomar offshore and Sangomar deep offshore (RSSD) contract area, offshore Senegal, for a cash consideration of up to $400-million plus the reimbursement of development capital expenditure incurred since January 2020.
The transaction will be subject to Senegalese government consent, as well as joint venture (JV) partners agreeing to the sale.
Woodside, which is the operator of the project and holds a 35% interest, told Mining Weekly on Tuesday that the company would “consider all its options” with regard to the sales process.
"We are proud of what Cairn has achieved in Senegal. Our discoveries were the country's first deep-water wells and opened up a new basin play on the Atlantic Margin. What's more, they successfully laid the foundations for Senegal's first oil and gas development, which will deliver enduring benefits to its people,” said Cairn Energy CEO Simon Thomson.
Thomson said that the transaction with LukOil, which followed a "comprehensive sales process", was consistent with Cairn’s disciplined approach to portfolio management and capital allocation, and its long-term strategy to return capital to shareholders.
“We will work closely with the government of Senegal, LukOil and JV partners to ensure the transaction is completed as soon as possible,” he added, noting that close of the transaction was targeted for the fourth quarter of this year.
JV partner FAR has previously flagged its intention to sell its own 15% interest in the RSSD project, either in part or as a whole as the company struggled to finance its part of the expenditure.
The RSSD project includes the Sangomar development, where first oil is being targeted for 2023.
The Sangomar JV partners took an unconditional final investment decision for the Phase 1 development and started execution of the phase activities in January this year.
The Sangomar Phase 1 development will focus on developing the less complex reservoir units and testing other reservoirs to support gas export to shore. Phase 1 is targeted to produce some 230-million barrels of crude oil.