- Woodside Petroleum (WPL) says it will exercise its right to pre-emptively acquire Cairn Energy’s stake in the Sangomar oil field in Senegal
- The company plans to fork out roughly US$400 million (around A$556 million) for the acquisition, which will block Russia-based LUKOIL Upstream Senegal BV from purchasing the interest
- This includes an upfront payment of approximately US$300 million (roughly A$417 million), as well as contingent payments of up to US$100 million (about A$139 million)
- The acquisition remains subject to approval from the Government of Senegal and Cairn Energy’s shareholders
- Woodside Petroleum shares are steady at market open, priced at $20.37
Woodside Petroleum (WPL) has said it will exercise its right to pre-emptively acquire Cairn Energy’s stake in the Sangomar oil field in Senegal.
As a 35 per cent holder and operator of the West African development, the company has the right to match a bid from Russia-based LUKOIL Upstream Senegal BV, under which Capricorn Senegal — a subsidiary of Cairn Energy — would offload its 40 per cent interest.
In accordance with the terms of the Sangomar joint venture, Woodside will fork out approximately US$400 million (around A$556 million) to increase its stake. This will be comprised of an upfront payment worth US$300 million (roughly A$417 million), as well as contingent payments of up to US$100 million (about A$139 million).
Woodside’s acquisition is driven largely by U.S. economic sanctions that have been imposed on LUKOIL as a Russian entity, which would have restricted America’s involvement in the Sangomar project.
Peter Coleman, CEO of Woodside Petroleum, said the deal would not only deepen the company’s interest in the potentially world-class asset, but it would also remove the uncertainty surrounding the sanctions.
“Increasing our interest maintains the early momentum achieved since achieving final investment decision with our joint venture partners earlier this year and will simplify the equity structure for the RSSD joint venture,” Peter commented.
“We will continue to apply our prudent approach to capital and balance sheet management, including consideration over the next 12 months of value accretive reduction in our equity interest in Sangomar,” he added.
Woodside noted that its acquisition of Cairn Energy’s stake will be funded using its existing cash reserves, and the Sangomar project has been targeted for first oil production in early 2023 with a capacity of around 100,000 barrels per day.
Woodside Petroleum shares are steady at market open, priced at $20.37 at 10:57 am AEST.