Australian energy company Woodside has exercised its right to pre-empt the sale of Cairn’s entire participating interest in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture to Russia’s Lukoil.
Per the RSSD joint operating agreement, the terms of Woodside’s acquisition of Cairn’s entire participating interest will reflect those of the Cairn – Lukoil transaction .
Namely, Woodside will pay $300 million upfront plus working capital adjustments, including reimbursement of Cairn’s development capital expenditure incurred since 1 January 2020.
The company stated on Monday that Woodside would also pay contingent payments of up to $100 million linked to commodity price and the timing of first oil.
Woodside’s acquisition remains subject to Government of Senegal approval, Cairn Energy shareholder approval, and other customary conditions precedent. The acquisition will be funded from Woodside’s current cash reserves.
Following the completion of the buy, Woodside’s equity interest in the RSSD joint venture will increase to around 68 per cent and Woodside will remain the operator.
The company’s CEO Peter Coleman said the acquisition represents an opportunity for Woodside to deepen its interest in a well understood, world-class asset with near-term production, while also protecting shareholder interests by removing the potential uncertainty of U.S. 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 the final investment decision (FID) with our joint venture partners earlier this year and will simplify the equity structure for the RSSD joint venture.
“ We look forward to completing the transaction with Cairn and working with all stakeholders, including potential new joint venture partners, to successfully deliver Senegal’s first oil project ”.
The $4.2 billion FID on the Sangomar offshore oil field was made at the start of 2020 and the field development has started.
The company said earlier this year that the project remains on track for first oil in 2023 via a Modec-supplied FPSO regardless of the coronavirus pandemic. The recoverable reserves of Sangomar field stand at around 500 million boe.