By pre empting the sale of Occidental’s interests in the Jubilee and TEN fields in Ghana to Kosmos Energy, the old partners in the fields have bumped up their equities, with Tullow Oil becoming the major beneficiary.
This transaction takes Tullow’s equity interests to 38.9% in the Jubilee field and to 54.8% in the TEN fields and adds c.5,000BOPD of unhedged daily production”, Tullow explains.
“Following completion of the pre-emption by both Tullow and PetroSA, Kosmos’ ultimate interest in Jubilee will be reduced by 3.8% to 38.3% (Kosmos retains ~80% of the original acquired interest), and Kosmos’ ultimate interest in TEN will be reduced by 8.3% to 19.8% (Kosmos retains ~25% of the original acquired interest)”, the company says in an update.
Whereas Tullow Oil has finalized the process and followed through to payment, PetroSA, the South African state hydrocarbon firm, is still working its way through the books and its conclusion “remains subject to execution of definitive agreements and required government approvals”.
Consideration paid to Kosmos from Tullow after taking into account closing adjustments was approximately $118Million in the first quarter. An additional ~$10 million is expected to be payable on completion of the PetroSA pre-emption process. Kosmos plans to accelerate debt reduction with the proceeds.
Tullow says that the additional equity increases its 2022 capital expenditure forecast by $30Million to $380Million “and is expected to generate c.$300Million incremental free cash flow at $75/bbl between 2022 and 2026”.