Asset A&D

Shell to Acquire Exploration Interests from Kosmos for up to US$200 Million

By Shriya Bhargava
September 09, 2020
2 minutes read
Offshore Rig

Royal Dutch Shell Plc has entered into an agreement with Kosmos Energy Ltd. to acquire a portfolio of its frontier exploration interests in São Tomé & Príncipe, Suriname, Namibia and South Africa.

The assets include a 25.0% participating interest in Block 6, a 35% operated interest in Block 11, and a 35% participating interest in Blocks 10 and 13 located off the coast of São Tomé & Príncipe. In addition, Shell will also acquire a 33.33% operated interest in Block 4 offshore Suriname, a 45% participating interest in PEL 39 offshore Namibia, and a 45% participating interest in Northern Cape Ultra Deep License Area (Blocks 3013 and 3113) off the western coast of South Africa. Following the completion of the transaction, Kosmos will retain a focused exploration portfolio in the U.S. Gulf of Mexico and West Africa.

Under the terms of the agreement, the consideration comprises an initial cash payment of US$100 million, plus additional contingent payments of US$50.0 million payable upon each commercial discovery from the first four exploration wells drilled across the assets, capped at US$100.0 million in aggregate. Three out of the four wells are currently planned for 2021.

Dallas-based Kosmos Energy is an independent E&P company focused on deepwater exploration and production, and operates along the Atlantic Margins, with key assets that include production offshore Ghana, Equatorial Guinea and U.S. Gulf of Mexico, and a gas development offshore Mauritania and Senegal.

“With this transaction, we are continuing to focus our exploration portfolio on proven basins that offer superior returns with shorter payback and significant resource potential. The proceeds enable Kosmos to accelerate high graded exploration opportunities while strengthening the balance sheet, positioning Kosmos to create additional shareholder value. The contingent payments locked into the agreement with Shell ensure we retain upside from frontier exploration with no further investment,” said Kosmos Energy’s Chairman & CEO, Andrew G. Inglis.

The transaction is subject to customary closing conditions, including the receipt of regulatory approvals, and is expected to close in Q4-2020.

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