FPSO specialist BW Offshore is forming an oil and gas company, and is buying a stake in an offshore block in Gabon.
The provider of floating production units has 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 Singpore-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 firm will acquire 66.67% of the Dussafu production sharing contract offshore Gabon, owned by Harvest Energia, for $32 million in cash.
BW has is also looking to buy a further 25 percent stake in the block from Panoro, which owns the remaining 33.33 percent, for $12 million.
“We have previously said that we are exploring partnerships and alternative commercial models. We are now starting to deliver on this strategy. We see the investment in the Dussafu block as an attractive opportunity with the potential to create significant value for the shareholders of BW Offshore”, said CEO Carl K. Arnet of BW Offshore.
The drop in oil price over the past years has reduced the costs of drilling and subsea equipment significantly, which in turn has lowered the break-even price required for a Dussafu development. Following Gabonese license requirements, first oil is planned for 2018, the company said.
CEO Carl K. Arnet further said, “The availability of production assets that match field requirements de-risks the development and makes it realistic to achieve first oil within 2018. The project economics are robust at and below the current oil price.”
Worth noting, the sale of Gabon stake means the company Harvest Natural Resources will cease presence in Gabon, and move forward with dissolution plans for the company. Under the dissolution, liquidation and winding up process under Delaware law, the proceeds from the Gabon transaction would be combined with other Harvest assets to be distributed to Harvest’s stockholders.