FPSO provider BW Offshore has entered into a sale and purchase agreement with Panoro Energy to buy a further 25% working interest in the Dussafu production sharing contract, offshore Gabon.
BW Offshore in December 2016 formed a joint venture company with BW Group, known as BW Energy Holdings Pte. Ltd. (BWEH), for the purpose of pursuing oil and gas interests. The Singapore-incorporated JV is owned 66.67% by BW Offshore and 33.33% by Maple Company Limited, a wholly owned subsidiary of BW Group Limited.
The joint venture then announced its plans to acquire 66.67% of the Dussafu production sharing contract offshore Gabon from Harvest Energia, for $32 million in cash.
BW was also looking to buy a further 25 percent stake in the block from Panoro, which owns the remaining 33.33 percent, for $12 million.
The agreement was signed on Tuesday, February 21 between Panoro’s fully-owned subsidiary, Pan-Petroleum Gabon B.V. (PPGBV), and BW Offshore’s subsidiary, BW Energy Gabon Pte. Ltd. (BWEG), which is owned by BWEH.
Under the terms of the agreement, Panoro will sell a 25% working interest in the Dussafu PSC to BWEG for a total cash consideration of $12 million. At closing of the transaction, Panoro will receive $11 million in cash. The remaining $1 million in cash will be paid no later than December 30, 2017.
Panoro will also receive a non-recourse loan from BWEG of up to $12.5 million at 7.5% annual interest rate in order to fund all expenditures through to first oil production at Dussafu. Post-completion, Panoro will retain an 8.33% working interest in the Dussafu PSC. The total gross capital expenditure to reach first oil in 2018 is estimated to be a maximum of $150 million.
The closing of the transaction is subject to customary conditions precedent, including but not limited to the approval of the Gabonese Government and the completion of the separate sale of Harvest Dussafu B.V. to BWEG. It is expected that the transaction will close in the first quarter of 2017.
Julien Balkany, Chairman of Panoro, said, “Panoro is very enthusiastic about this landmark transaction and our new innovative partnership with BW Offshore to create shareholder value.”
John Hamilton, Chief Executive Officer of Panoro, said, “Since entering the Dussafu concession in 2008, Panoro has drilled two discovery wells and acquired extensive seismic data. We are thrilled to see the development finally moving forward together with our new operating partner, BW Energy. This transaction strengthens our balance sheet with additional cash, and the non-recourse loan for the Dussafu development limits our financial exposure through to first oil.”
BWEG will, pursuant to closing of the transactions with PPGBV and Harvest Energia B.V., hold a 91.667% working interest in the Dussafu production sharing contract, subject to discussions with the Gabon Oil Company (GOC) for their potential participation. Panoro Energy will hold the remaining 8.33% working interest.