PERTH (miningweekly.com) – Australian oil and gas producer Woodside has exercised its rights over the Rufisque offshore, Sangomar offshore and Sangomar deep offshore (RSSD) contract area, offshore Senegal, pre-empting joint venture (JV) partner FAR’s sale of its interest in the project.
FAR in November announced that it had entered into a sale and purchase agreement for its interest in the RSSD with ONGC Videsh Vankorneft for $45-million.
In addition, ONGC has agreed to reimburse FAR’s share of working capital for the project from January 2020, totalling $66.58-million, payable on the completion of the transaction. The reimbursement would comprise cash calls paid by FAR, including $29.6-million paid to Woodside.
Furthermore, the transaction with ONGC also includes an entitlement to certain contingent payments, capped at $55-million, based on future oil sales from the RSSD project. The contingent payment comprises 45% of entitlement barrels sold over the previous calendar year, and multiplied by the excess of the crude oil price per barrel and $58/barrel.
FAR has a 13.67% interest in the Sangomar exploitation area and a 15% interest in the remaining RSSD evaluation area.
Woodside on Thursday said that the terms of its acquisition would reflect those of the ONGC transaction, including the $45-million transaction payment, reimbursing FAR’s share of working capital, and entitlement to certain contingent payments capped at $55-million.
Woodside CEO Peter Coleman said the acquisition of FAR’s participating interest makes the value proposition for Sangomar even more compelling.
“Sangomar is an attractive, de-risked asset in execute phase, offering near-term production. The acquisition is value accretive for Woodside shareholders and results in a streamlined joint venture, which will assist in our targeted sell-down in 2021.
“We plan to commence development drilling next year as we progress the project to targeted first oil in 2023,” he said.
Woodside’s participating interest in the RSSD JV will increase to 82% for the Sangomar exploitation area and 90% for the remaining RSSD evaluation area following completion of this acquisition and the Cairn acquisition announced in August this year, assuming no other JV participant pre-empts.
The acquisition will be funded from current cash reserves.
The acquisition remains subject to government of Senegal approval, FAR shareholder approval and other customary conditions precedent.
Woodside has previously said that first oil from the Sangomar field development is targeted for 2023, with the project making up an important part of Woodside’s growth strategy.