The Sangomar field is located within the Senegalese part of the Mauritania-Senegal-Guinea Bissau Basin
Woodside Energy is the operator of the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore joint venture. (Credit: C Morrison from Pixabay)
Australia’s Woodside has exercised its right to pre-empt the sale of Cairn Energy’s stake in the $4.2bn Sangomar oil project in Senegal to Russia’s Lukoil.
The Sangomar field is located within the Senegalese part of the Mauritania-Senegal-Guinea Bissau Basin.
Woodside’s pre-emptive rights match Lukoil’s $400m bid made earlier to purchase Cairn Energy’s 40% stake in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture offshore Senegal.
Woodside Energy serves as the operator of the JV with 35% stake while other partners include Crain Energy Senegal (40%), FAR (15%) and Senegal national oil company Petrosen (10%).
Woodside to pay $300m upfront and contingent payments of up to $100m
As per the RSSD joint operating agreement, Woodside is entailed to make $300m in upfront payment including reimbursement of Cairn’s capital expenditure on project development incurred since 1 January 2020.
Additionally, Woodside will pay contingent payments of up to $100m linked to commodity price and the first oil timing.
The Woodside’s acquisition, however, is subject to Government of Senegal approval, Cairn Energy shareholder approval, and other customary conditions precedent.
Upon completion of the transaction, Woodside’s stake in the RSSD joint venture will increase to around 68% and will remain the operator.
Woodside CEO Peter Coleman said: “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 final investment decision with our joint venture partners earlier this year and will simplify the equity structure for the RSSD joint venture.
“The strength of our balance sheet and our liquidity position have enabled us to take advantage of this opportunity.
“We will continue to apply our prudent approach to capital and balance sheet management, including consideration over the next 12 months of value accretive reduction in our equity interest in Sangomar.”