BP is buying into Kosmos Energy’s exploration blocks located offshore Mauritania and Senegal.
The UK oil giant said Monday it would buy a 62% working interest, including operatorship, of Kosmos’ exploration blocks in Mauritania and a 32.49% effective working interest in Kosmos’ Senegal exploration blocks. BP said the acreage held “world-class deepwater gas discoveries and exploration prospectivity across both countries. “
The approximately 33,000 square kilometers of acreage includes the Tortue field. The field is estimated to contain more than 15 tcf of discovered gas resources.
The total acreage, by Kosmos’ estimates, could contain roughly 50tcf of gas resource potential and more 1 billion barrels of liquids resource potential.
BP has said it will invest nearly one billion dollars mostly in the form of a multi-year exploration and development carry to acquire a 62% interest and operatorship of offshore Blocks C-6, C-8, C-12 and C-13 in Mauritania and an effective 32.49% interest in the Saint-Louis Profond and Cayar Profond blocks in Senegal.
Under the terms of the agreements, BP will pay Kosmos a cash bonus of $162 million on completion. Moving forward, BP will carry Kosmos’ exploration and appraisal costs of $221 million along with Kosmos’ development costs of $533 million, including front-end engineering and design studies. Project sanction is expected by 2018.
BP Chief Executive Officer Bob Dudley said: “BP’s entry into Mauritania and Senegal represents an exciting strategic opportunity to work with Kosmos Energy in an emerging world-class hydrocarbon basin. We believe our expertise in integrating the gas value chain, together with a talented exploration partner in Kosmos, along with the support of the Mauritanian and Senegalese governments brings together all the elements needed to create a new LNG hub in Africa.”
In order to reduce development time and drive capital efficiency, BP says the partners plan to process and transport the gas from Tortue at a nearshore LNG facility. The proposed complex could be expanded in phases to accommodate future gas discoveries, BP said.
Andrew G. Inglis, Kosmos Energy’s chairman and chief executive officer said: “Following a thorough farm-out process, BP emerged as the right partner to help us advance the Tortue gas project at pace and take forward a multi-well exploration program that will test the basin’s liquids potential beginning in mid-2017.”
“The transaction strengthens our balance sheet by materially reducing our capital expenditure requirements, effectively funding our Mauritania-Senegal work program for the next several years. The enhanced free cash flow generation will enable us to continue to pursue other growth opportunities in our portfolio with discipline,” Inglis added.
Under the terms of the agreements, BP and Kosmos have also agreed that Kosmos will remain the technical operator for the exploration phase of the project and drill three new exploration wells beginning in 2017.
In addition to the existing blocks, the companies have agreed to cooperate in areas of mutual interest in offshore Mauritania, Senegal and The Gambia with Kosmos acting as the exploration operator and BP as the development operator.
Subject to government approvals, the agreements are expected to close by the first quarter of 2017.
Offshore Energy Today Staff