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Tuesday, February 23, 2016
Cobalt International Energy provided an update on the sale of Blocks 20 and 21 in Angola to the country’s state-run oil and gas firm Sonangol. In August Cobalt and Sonangol executed a purchase and sale agreement for the sale of Cobalt’s 40% working interest in the blocks for an aggregate gross consideration of $1.75 billion before certain transaction expenses and other US and Angolan taxes.
Per the terms of the purchase and sale agreement, Cobalt received the initial payment of $250 million in 2015 and expects to close the transaction upon receipt of applicable Angolan government approvals. While it is unknown when these government approvals will be obtained, Cobalt continues to work with Sonangol to progress the close of the sale transaction.
In light of the sale transaction and consistent with Sonangol’s desires, Cobalt has initiated activities to cease its Angola operations by late summer. In this regard, Cobalt has informed most of its vendors, contractors, and employees of its plans for cessation of operations over the next few months. In addition, as agreed with and advised by Sonangol, Cobalt has ended all contract discussions with potential contractors in connection with the Cameia development project.
Cobalt will drill the remaining two exploration commitment wells on Block 20 and then intends to release the Petroserv Catarina drilling rig upon its contract expiry in May 2016. All of these actions are in support of the transfer of operations to the new operator as contemplated by the purchase and sale agreement between Cobalt and Sonangol.
Lastly, any costs attributable to Blocks 20 and Block 21 for the period from January 1, 2015 through the date upon which Cobalt receives the Angolan government approval will be reimbursed by Sonangol pursuant to the terms of the purchase and sale agreement, including costs related to the final two exploration commitment wells, which are largely covered by Letters of Credit currently held in discontinued operations.
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