African company joins deepwater block offshore Ghana with purchase of Aker Energy

Africa Finance Corporation (AFC) has acquired Norwegian oil and gas company Aker Energy and, through the transaction, has become an owner of a deepwater block offshore Ghana.

Aker Capital and The Resource Group TRG have agreed to sell their shares in Aker Energy to AFC Equity Investment, a company owned by AFC, Aker ASA revealed in an announcement on 14 April.

Through the transaction, AFC will become the sole shareholder of Aker Energy, and thereby 50 per cent owner of the Deepwater Tano Cape Three Points (DWT/CTP) block offshore Ghana, comprising discoveries of 450-550 million barrels of oil equivalents, including the Pecan field.

“Aker still believes in the resource potential of the DWT/CTP block in Ghana. AFC is already invested in this field development and is well-positioned to continue this development,” said Øyvind Eriksen, President and CEO of Aker ASA.

“In line with Aker’s capital allocation priorities, we have thus made a strategic decision to sell our stake in the Ghana assets with an earn-out model as a consideration. This way we share the risk and reward of this future development.”

Aker currently holds 50.79 per cent of the shares in Aker Energy and TRG holds 49.21 per cent. The company’s management team will remain unchanged and will work towards submission of the Plan of Development (PoD) for the Pecan field to Ghanaian authorities this month.

AFC previously invested $200 million in senior secured bonds in the DWT/CTP block development and its CEO currently serves on the Aker Energy board.

The consideration for the share purchase by AFC is an earn-out model based on potential future sales and/or production proceeds from Pecan. Aker will on an ongoing basis assess the value of the potential earn-out consideration compared to its current book value, which forms part of Aker’s Net Asset Value reporting.

“The DWT/CTP Project, which aims to develop Ghana’s proven resources, has the potential to create jobs, increase government revenues, and spur development in the country,” said Samaila Zubairu, President and CEO of AFC.

“Our continuing collaboration with Aker entities for technical support to the development will ensure that the PoD is submitted on time and in line with the framework agreed with the Government of Ghana. This is a positive step toward achieving the project’s goals and significantly contributing value to the Ghanaian economy.”

As a reminder, an integrated POD for the DWT/CTP block was submitted to Ghana’s authorities in March 2019, which entailed a phased development and production of the resources in the DWT/CTP contract area, which would start with the Pecan field as phase one. However, about a year later, Aker postponed the project FID – amid the Covid-19 pandemic – and terminated its agreement with Yinson to provide an FPSO for the project.

In June 2020, the Norwegian company reaffirmed its commitment to the project and to finding a solution that would allow for the beginning of a phased development of the field. While the original development concept was based on a centralized FPSO supporting the development of the entire field, as well as tie-ins of all other area resources, the focus then shifted toward a phased development approach.