AFRICA – Royal Dutch Shell, the third largest oil and gas company in the world by revenues, is set to acquire certain exploration assets of Oil and gas producer Kosmos Energy in Africa and South America at a cost of US$200 million.
According to a report by Ghana Web Shell will acquire the Kosmos Energy’s participating interest in blocks offshore São Tomé and Príncipe, Suriname, Namibia and South Africa.
Analysts in the oil and gas industry predict that it is likely that part of the sales proceeds will be used to fund its share of ongoing exploration costs in Ghana.
In Ghana, Kosmos Energy partners with a consortium of international firms to explore for oil in and around the Deepwater Tano block where it discovered the country’s first commercial oil find.
The oil find was subsequently developed into Ghana’s flagship Jubilee oil and gas field and has an estimated oil reserve of 380 million barrels of oil.
Kosmos says that it plans to use up to one-third of the initial sale proceeds of US$100 million to test two high-quality infrastructure-led exploration prospects in the Gulf of Mexico.
The company is a highly successful explorer, and indeed prefers to sell most of its stake in its discoveries rather than hold large equity stakes in producing fields.
About a decade ago Kosmos Energy tried to sell its stake in the Jubilee field to Exxon Mobil, but the transaction was blocked by regulators in Ghana on the grounds of its involving proprietary data to attract the buyer.
Dallas, Texas-based Kosmos said it expects to realize about US$125 million in total savings across capital expenditures over the next two years after the sale to Shell.
The announcement by shell to acquire assets of Kosmos energy is a twist of events in Shell’s energy strategy.
The Dutch-English oil supermajor had earlier announced that it is looking to slash up to 40% off the cost of producing oil and gas in a major drive to save cash so it can overhaul its business and focus more on renewable energy and power markets.
Liked this article? Subscribe to DealStreet Africa News, our regular email newsletter with the latest news, deals and insights from Africa’s business, economy and more. SUBSCRIBE HERE
