PERTH (miningweekly.com) – Australian oil and gas major Woodside has exercised its pre-emptive rights over joint venture (JV) partner Cairn Energy’s entire participating interest in the Sangomar offshore and Sangomar deep offshore (RSSD) contract area, offshore Senegal.

Cairn in July this year struck a deal with Russian producer LukOil to divest of its 40% interest in the RSSD project for a cash consideration of up to $400-million, plus the reimbursement of development capital expenditure incurred since January 2020.

Woodside, which is the operator of the JV, said at the time that it would consider its options.

The ASX-listed company has now exercised its pre-emptive right, with its acquisition of Cairn’s participating interest reflecting those of the LukOil offer, including an up-front cash purchase price of $300-million plus working capital adjustments, including reimbursement of development capital expenditure incurred since January, a contingent payment of up to $100-million linked to commodity prices and the timing of first oil.

Woodside said that Cairn’s participating interest could also be reduced to the extent that the remaining JV partners exercised their pre-emptive rights.

Woodside CEO Peter Coleman noted that the acquisition presented an opportunity for Woodside to deepen its interest in a well-understood, world-class asset with near-term production, while also protecting shareholder interest by removing the potential uncertainty of US sanctions applying to the Sangomar field development.

“Progressing the Sangomar field development and delivering targeted first oil in 2023 is an important part of Woodside’s growth strategy. Increasing our interest maintains the early momentum achieved since achieving final investment decision with our JV partners earlier this year and will simplify the equity structure for the RSSD JV,” said Coleman.

“The strength of our balance sheet and our liquidity position have enabled us to take advantage of this opportunity. We will continue to apply our prudent approach to capital and balance sheet management, including consideration over the next 12 months of value accretive reduction in our equity interest in Sangomar.”

The transaction remains subject to the consent of Cairn Energy shareholders, as well as Senegalese government consent.