Cobalt’s sale of Angola blocks to Sonangol ‘unlikely to close’

Cobalt International Energy has informed it is unlikely that its sale agreement with Sonangol for two blocks offshore Angola will close. 

The deal, worth $1.75 billion, according to which Sonangol was to acquire all of Cobalt’s 40% participating interest in Blocks 21/09 and 20/11 was made in August 2015.

According to Cobalt’s second quarter 2016 update on Tuesday, in late July, Cobalt’s Chief Executive Officer, Tim Cutt, met with Sonangol’s Chairwoman of the Board of Directors, Isabel dos Santos, and members of her executive team in Luanda, Angola to discuss the status of the sale of Angola Blocks 20 and 21 to Sonangol.

At this meeting, Cobalt and Sonangol jointly agreed that Cobalt would market Cobalt’s 40% working interest in Blocks 20 and 21 to sell the assets to a third party. On August 1, 2016, Cobalt received a letter from Chairwoman Isabel dos Santos confirming Sonangol’s support of such marketing and sale process.

Given this agreement to market Cobalt’s interest in Blocks 20 and 21, it is unlikely that the sale transaction between Cobalt and Sonangol will close pursuant to the terms of the August 2015 purchase and sale agreement, and therefore it is likely the purchase and sale agreement will automatically terminate on August 22, 2016, Cobalt said on Tuesday.

Cobalt also said it is currently preparing a data room for its Angola assets and will immediately start the marketing and sale process.

Commenting on this Angola sale update, Cutt said, “Although we would prefer the transaction with Sonangol to close, I am pleased that we can remarket these attractive liquid rich assets to third parties. The development cost environment has improved substantially, the fundamentals for medium to long term liquids pricing remains strong and we have delivered two new discoveries on Block 20.”

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