Chinese behemoth CNOOC is set to acquire 55.55% interest from Svenska Petroleum in Block 2, the Sinapa Licence, and Blocks 4A & 5A, the Esperança Licence, offshore Guinea Bissau.
Under the terms of the farm-out agreement, CNOOC will be assigned a 55.55% participating interest in the acreages, with the obligation to fund 55.55% of all expenditures under their respective Agreement for Joint Venture Participation (AJVP) and Joint Operating Agreements (JOAs).
CNOOC’s interest will convert to a 50.0% participating interest in each of the licences in the event of a commercial discovery.
Subject to receiving regulatory approvals, the transaction is expected to close in the third quarter of 2019.
The Swedish based player Svenska will retain a reduced 23.03% participating interest and shall continue to act as operator while CNOOC, upon conclusion of the upcoming offshore drilling campaign, may elect to assume operatorship. FAR, the Australian explorer, continues to hold its 21.42% participating interest in each of the licences.
Completion of the farm-out agreement is subject to approval from the Government of the Republic of Guinea-Bissau and customary Joint Venture consents which, under the AJVP, is not subject to pre-emption rights.
Svenska will continue to operate the exploration licences as the JV prepares to drill the first ever deepwater exploration well offshore Guinea-Bissau in the first quarter of 2020.
“Drill planning is on target to test Greater Atum Prospect (471MMbbls*, 100% basis, best-estimate prospective resource) in Q1 2020”, says FAR. “Greater Atum is a shelf-edge combined structural-stratigraphic play analogous to giant SNE oil discovery offshore Senegal”.
Past offshore exploration in Guinea-Bissau had initially concentrated in shallow waters less than 200m, targeting a variety of salt diapiric-related features. “Drilling to date has encountered excellent quality reservoir sands across multiple intervals exhibiting abundant oil and gas shows”, FAR indicates in a report. The Sinapa permit has two discoveries, with light oil having been recovered to surface from both those locations. The more significant of the two is the Sinapa discovery with contingent resources of ~13.4MMbbls* of recoverable light oil (unrisked, 2C case, 100% basis).
The Greater Atum will be the first offshore exploration well drilled since 2007 and the first ever deepwater exploration well offshore Guinea-Bissau.
CNOOC Limited, (together with its subsidiaries) is the largest producer of offshore crude oil and natural gas in China and one of the largest oil and gas exploration and production companies in the world.