The deal related to the Jubilee and TEN fields will help the US energy company in reducing its debt
Occidental has agreed to divest its interests in two Ghanaian offshore fields for $750m to Kosmos Energy and Ghana National Petroleum Corporation (GNPC).
The deal includes the US energy company’s stakes in the Jubilee and TEN fields. The two Ghanaian offshore fields, put together, produced 22 thousand barrels of oil equivalent per day during Q2 2021.
The deal with Kosmos Energy, which has already closed, is worth $550m. As part of it, Kosmos Energy acquired an additional 18% stake in the Jubilee field, while increasing its stake in the TEN field by 11%.
The company’s interests in the Jubilee and the TEN fields will be 42.1% and 28.1%, respectively.
Kosmos Energy said that the deal is conditional on a 30-day pre-emption period, which, if exercised fully, can cut down its ultimate interest in Jubilee by 3.8% to 38.3%, and by 8.3% to 19.8% in the TEN field.
Kosmos Energy chairman and CEO Andrew Inglis said: “This is a compelling transaction for Kosmos that accelerates our strategic delivery and is expected to provide long-term sustainable cash flow from fields where we have a deep understanding of the value and future upside.
“We expect the additional Ghana interests to generate around $1 billion of incremental free cash flow by the end of 2026 at $65 Brent with upside given current prices. We plan to use the additional cash flow from these assets to reduce absolute debt levels and fund our growth in LNG.”
On the other hand, Occidental’s sale of stakes in the two fields to GNPC is for a consideration of $200m. The deal is anticipated to close in Q4 2021.
Occidental president and CEO Vicki Hollub said: “With this transaction, we have achieved our post-Colombia divestiture target.
“Proceeds from the Ghana asset sale will be applied to debt reduction. Combined, our divestiture programme and free cash flow generation have enhanced our ability to reduce debt, as evidenced by the $4.5 billion we have repaid year to date.
“We remain committed to creating value for our shareholders through our deleveraging efforts.”
Earlier this month, a subsidiary of Occidental Petroleum had been awarded exploration and production (E&P) contracts for four offshore blocks in Colombia.