Lukoil Acquires Cairn’s 40% Interest in the Sangomar Development, Offshore Senegal
Russian integrated oil & gas company PJSC Lukoil has entered into an agreement with Cairn Energy Plc to acquire its 40% interest in the RSSD Contract Area located off the coast of Senegal.
Under the terms of the agreement, the total cash consideration payable on completion is US$300 million, plus a potential bonus payment of up to US$100 million payable after production from the project begins. The agreement also provides for the reimbursement of development capital expenditure incurred after January 1st, 2020. Upon completion of this transaction, Cairn intends to return at least US$250 million to shareholders by way of a special dividend.
The RSSD project comprises the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore blocks, which cover a combined area of 2,212 sq. km. The blocks are located 80 km off the Senegalese coast in water depths ranging from 800 to 2,175 m. The development of the Sangomar field began in early 2020. According to Lukoil’s estimates, the field contains recoverable reserves of approximately 500 million barrels of oil equivalent (MMboe).
Woodside Petroleum Ltd. holds a 35% operating interest in the RSSD project, while the remaining 15% and 10% interests are held by FAR Ltd. and state-owned company Societe des Petroles du Senegal Ltd. (Petrosen) respectively.
“Entering the project with already-explored reserves at an early stage of their development is fully in line with our strategy and allows us reinforcing our presence in West Africa. Joining the project with qualified international partners will allow us to gain additional experience in the development of offshore fields in the region,” said Vagit Alekperov, President of Lukoil.
“We are proud of what Cairn has achieved in Senegal. Our discoveries were the country’s first deep-water wells and opened up a new basin play on the Atlantic Margin. What’s more, they successfully laid the foundations for Senegal’s first oil and gas development, which will deliver enduring benefits to its people,” said Simon Thomson, CEO of Cairn Energy. “We will work closely with the Government of Senegal, LUKOIL and joint venture partners to ensure the transaction is completed as soon as possible,” he added.
The transaction is subject to customary closing conditions, including the receipt of shareholder, partner and government approvals, and is expected to close in Q4-2020.
Rothschild & Co. and Jefferies International are acting as financial advisors to Cairn Energy in connection with the transaction.