Woodside Petroleum (WPL) has made a second move into West African oil provinces with the news that it will pay up to $US430 million to buy ConocoPhillips’ stake in three deepwater oil blocks off the coast of Senegal.
The initial cost is $US350 million ($A460 million), but there is an extra $US80 million payment as a completion adjustment payment when the transaction settles.
The stake includes a 35% interest in the SNE deepwater oil discovery – one of the world’s most promising oil finds in recent years, as well as the FAN oil discovery.
The SNE discovery alone is estimated to hold 560 million barrels of recoverable oil reserves, Woodside said in yesterday’s statement.
“We are taking advantage of our balance sheet to acquire a world-class asset that fits well with our capabilities, offers significant future upside in exploration and line-of-sight to near-term oil production,” its chief executive Peter Coleman said.
Mr Coleman said the acquisition aligned with the company’s growth strategy by providing a significant position in an under-explored and highly prospective emerging oil province. The SNE and FAN discoveries opened up the basin, and recently completed appraisal work has proven up high-quality resources.
“We are taking advantage of our balance sheet to acquire a world-class asset that fits well with our capabilities, offers significant future upside in exploration and line-of-sight to near term oil production.
“It builds on our agreement to acquire a 65% interest in the AGC Profond exploration block located to the south in the Senegal-Guinea Bissau joint development zone and extends our regional focus in West Africa.
“We look forward to working with the Government of Senegal and joint venture participants Cairn Energy, FAR Limited, and Petrosen, the Senegal National Oil Company, to progress the commercial development of SNE and any future discoveries," Mr Coleman said.
In February Woodside paid an unknown amount for a 65% stake (and the operator’s role) in a 6700 square kilometre production sharing contract in the AGC Profond permit in the joint development area off the coast between Senegal and Guinea-Bissau.
The Senegal acquisition will support the company’s growth strategy of taking significant positions in an under-explored and highly prospective emerging oil province, Mr Coleman said.
The purchase and sale agreement with ConocoPhillips provides Woodside the option to become operator for development and production of the fields in the future.
Woodside’s net working share of the production at the moment totals 196 million barrels for which it said it is paying $US2.20 a barrel.
Britain’s Cairn Energy, which owns a 40% stake, is currently the fields’ operator but has been looking to sell down its interest.
Junior Australian explorer FAR Ltd also owns 15% of the fields, while Senegal’s state-owned Petrosen has a 10% holding. Woodside’s announcement whacked the FAR share price (see separate story).
Woodside has also bought some of the assets of US oil independent Apache for $4.6 billion. These are located mostly in Australia and Canada. It has also moved into Myanmar, but quit a stake in a huge gas field offshore Israel when government interference became too much.
Cash-rich Woodside has been under pressure from investors over its growth prospects since Oil Search rejected an $11.6 billion takeover bid in late 2015, and, and weak oil and LNG prices forced it to shelve its $50 billion Browse liquefied natural gas project in Western Australia earlier in 2016.
But late last year Woodside and its partners agreed to spend more than $2 billion on upgrading its huge Northwest Shelf LNG and oil project, and in June agreed with Mitsui of Japan to spend another $2.5 billion on the Greater Enfield oil project.
Woodside shares eased 1% to $26.76 yesterday as investors fretted about the renewed weakness in global oil prices.
