Shell, Kosmos strike deal for frontier exploration worth up to $200 million
Royal Dutch Shell PLC subsidiary BV Dordtsche Petroleum Maatschappij agreed to acquire interest in certain frontier exploration assets from Kosmos Energy, Dallas, for $100 million plus future contingent payments of up to $100 million.
Under the terms of the agreement, Shell will acquire Kosmos’ participating interest in blocks offshore São Tomé & Príncipe, Suriname, Namibia, and South Africa. The consideration consists of an upfront cash payment of $100 million, plus contingent payments of $50 million payable upon each commercial discovery from the first four exploration wells drilled across the assets, capped at $100 million in aggregate. Three of the four wells are currently planned for 2021.
Assets
Offshore Namibia, Kosmos holds a 45% participating interest in Shell-operated Block PEL 39 (45%). Kosmos entered a strategic exploration alliance with Shell in October 2018 to jointly explore in Southern West Africa. National Petroleum Corp. of Namibia holds the remaining 10%.
In early 2019, Kosmos executed a farm-in agreement with OK Energy to acquire a non-operated interest in the Northern Cape Ultra-Deep block offshore the Republic of South Africa. The acquisition was part of the strategic exploration alliance with Shell Exploration Co. to jointly explore in Southern West Africa. Kosmos holds a 45% interest in the Shell-operated block (45%). OK Energy holds the remaining 10%.
In São Tomé and Príncipe in the Gulf of Guinea, Kosmos holds interest in six blocks and is operator of four. In Block 5, Kosmos is operator with 59%. Partners are ANP-STP 15% and Equator 26%. In Block 12, Kosmos is operator with 45% participating interest. Partners are ANP-STP 12.5%, Equator 22.5%, and Galp 20%. Kosmos is operator of Block 11 with 35% participating interest. Partners are ANP 15%, Shell 30%, and Galp 20%. In Galp-operated Block 6 (45%), Kosmos holds a 25% participating interest. Partners are ANP 10% and Shell 20%. In BP-operated Blocks 10 and 13 (50%), Kosmos holds a 35% interest with remaining partner ANP-STP 15%.
Kosmos entered Suriname in December 2011 to explore the Upper Cretaceous stratigraphic play type along the northeast margin of South America. Kosmos is operator of Block 42 with 33.33% participating interest. Chevron and Hess both hold 33.33%. Kosmos operates Block 45 with Chevron in a 50-50 split.
Kosmos said it plans to use up to one-third of the initial proceeds to test two high-quality infrastructure-led exploration prospects in the Gulf of Mexico, each offering hub scale potential.
The deal is expected to close in this year’s fourth quarter subject to conditions and government approvals.
