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Tuesday, December 20, 2016
BP will be joining Kosmos Energy offshore Mauritania and Senegal. The two have entered into a partnership that will have them teaming up on the development and subsequent marketing of the LNG production from Kosmos’ gas discoveries offshore the two countries.
Under the terms of the agreement, BP will assume ‘named’ operatorship with a 62% working interest in Kosmos’ licenses covering blocks C6, C8, C12, and C13 offshore Mauritania, as well as an effective 32.49% working interest in the licenses covering the Saint Louis Offshore Profond and Cayar Offshore Profond blocks offshore Senegal. Kosmos will maintain a 28% and 32.51% effective working interest in the licenses offshore Mauritania and Senegal, respectively, and will continue as exploration operator.
Financially, Kosmos will see a fixed consideration of $916 million which includes $162 million in cash up front, $221 million carry on exploration and appraisal, a DST on the Tortue in 2017, and a maximum of $533 million carry on development costs until first gas production from the Tortue project. The carry on development costs includes the FEED study that will be completed in 2017.
Kosmos expects the FID on the project to be taken in 2018.
Kosmos will also receive a contingent bonus of up to $2 per barrel, for up to 1 billion barrels of liquids, structured as a production royalty, subject to a future liquids discovery and oil price.
Andrew G. Inglis, Kosmos Energy’s chairman and CEO said: “This agreement with BP demonstrates the value of our strategy, together with the quality of the basin we have opened offshore Mauritania and Senegal. 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. We are pleased to have secured a super-major partner that brings financial capability, deepwater development and LNG expertise, and a vision that is fully aligned with the interests of both countries.”
Bernard Looney, BP upstream chief executive said: “The Mauritania-Senegal basin is an asset with world-class scale and potential, and we look forward to working with the team at Kosmos and the governments of Mauritania and Senegal to efficiently explore and develop its full potential. We believe the basin will become an important profit center for our upstream business.”
Commenting on the commercial terms of the transaction, Inglis said: “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.”
Additionally, Kosmos and BP have entered into an exclusive exploration partnership covering potential new ventures opportunities in Mauritania, Senegal and The Gambia. Kosmos will remain exploration operator of all new ventures acquired within the areas of interest, while BP will become development operator.
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