Shell inks deal for frontier exploration assets worth up to US$200 million

Royal Dutch Shell Plc subsidiary BV Dordtsche Petroleum Maatschappij has agreed to acquire interest in certain frontier exploration assets from Kosmos Energy, Dallas, for US$100 million plus future contingent payments of up to US$100 million.

Under the terms of the agreement, Shell will acquire Kosmos’ participating interest in blocks offshore São Tomé & Príncipe, Suriname, Namibia, and South Africa. The consideration consists of an upfront cash payment of US$100 million, plus contingent payments of US$50 million payable upon each commercial discovery from the first four exploration wells drilled across the assets, capped at US$100 million in aggregate.

Three of the four wells are currently planned for 2021.

Assets

Offshore Namibia, Kosmos holds a 45% participating interest in Shell-operated Block PEL 39 (45%). Kosmos entered a strategic exploration alliance with Shell in October 2018 to jointly explore in Southern West Africa. National Petroleum Corporation of Namibia holds the remaining 10%.

In early 2019, Kosmos executed a farm-in agreement with OK Energy to acquire a non-operated interest in the Northern Cape Ultra-Deep block offshore the Republic of South Africa. The acquisition was part of the strategic exploration alliance with Shell Exploration Company to jointly explore in Southern West Africa. Kosmos holds a 45% interest in the Shell-operated block (45%). OK Energy holds the remaining 10%.

In São Tomé and Príncipe in the Gulf of Guinea, Kosmos holds interest in six blocks and is operator of four. In Block 5, Kosmos is operator with 59%. Partners are ANP-STP 15% and Equator 26%. In Block 12, Kosmos is operator with 45% participating interest. Partners are ANP-STP 12.5%, Equator 22.5%, and Galp 20%. Kosmos is operator of Block 11 with 35% participating interest. Partners are ANP 15%, Shell 30%, and Galp 20%. In Galp-operated Block 6 (45%), Kosmos holds a 25% participating interest. Partners are ANP 10% and Shell 20%. In BP-operated Blocks 10 and 13 (50%), Kosmos holds a 35% interest with remaining partner ANP-STP 15%.

Kosmos entered Suriname in December 2011 to explore the Upper Cretaceous stratigraphic play type along the north-east margin of South America. Kosmos is operator of Block 42 with 33.33% participating interest. Chevron and Hess both hold 33.33%. Kosmos operates Block 45 with Chevron in a 50-50 split.

Kosmos said it plans to use up to one-third of the initial proceeds to test two high-quality infrastructure-led exploration prospects in the Gulf of Mexico, each offering hub scale potential.

The deal is expected to close in this year’s fourth quarter subject to conditions and government approvals.

Source: Oil & Gas Journal