Asset A&D

Woodside Exercises Pre-Emption to Acquire Cairn's Interest in the RSSD Project

By Isha Makkar
August 18, 2020
2 minutes read
CNOOC Offshore Rig

Woodside Petroleum Ltd. has issued notice to Cairn Energy Plc to exercise its pre-emptive rights to acquire an additional 36.44% interest in the RSSD project located off the coast of Senegal. Capricorn Senegal Ltd., a subsidiary of Cairn Energy currently holds the interest in the project.

In July, Cairn Energy had entered into an agreement with integrated Russian oil & gas company PJSC Lukoil to divest its entire interest in the project. Under the terms of the agreement, the total cash consideration payable on completion was US$300 million, plus a contingent payment of up to US$100 million payable after production from the project begins. The agreement also provided for the reimbursement of development capital expenditure incurred by Cairn after January 1st, 2020.

At the time of the Lukoil-Cairn deal, Woodside Petroleum held a 35% operated interest in the project, while Cairn Energy held a 40% interest, and FAR Ltd. and state-owned company Societe des Petroles du Senegal Ltd. (Petrosen) held the remaining 15% and 10% interests, respectively. In August, Petrosen exercised a back-in option to increase its participating interest in the project from 10% to 18%, thereby reducing Woodside’s interest to 31.89%, Cairn’s to 36.44%, and FAR’s to 13.67%.

Woodside has exercised its pre-emption rights under the terms of the original RSSD joint operating agreement, and will acquire Cairn’s interest on the same terms as had been agreed to with Lukoil. FAR and Petrosen may also exercise their pre-emption rights with respect to the Lukoil-Cairn deal until August 26th, 2020.

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. The field is estimated to contain recoverable reserves of approximately 500 million barrels of oil equivalent (MMboe).

“Progressing the Sangomar Field Development and delivering targeted first oil in 2023 is an important part of Woodside’s growth strategy. 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,” said Peter Coleman, Woodside’s CEO.

Perth-based Woodside is Australia’s largest natural gas producer. The company is engaged in the exploration, evaluation, development, production and marketing of hydrocarbons, and has upstream operations internationally. Woodside currently holds interests in E&P licenses in Myanmar, Peru, Bulgaria, Ireland, Senegal, and Gabon.

The transaction is subject to customary closing conditions, including the receipt of shareholder and government approvals, and has an effective date of January 1st, 2020.

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