Delek to acquire Ceasar Tonga oil field interest from Shell

Delek Group agreed to acquire 22.45% interest in Caesar Tonga oil field in the Green Canyon area of the deepwater Gulf of Mexico from Shell Offshore Inc. for $965 million, having paid a $50-million deposit, and will sign a long-term off-take agreement with Shell Trading (US) Co. to purchase oil from the field for 30 years.

Apr 11th, 2019

Delek Group agreed to acquire 22.45% interest in Caesar Tonga oil field in the Green Canyon area of the deepwater Gulf of Mexico from Shell Offshore Inc. for $965 million, having paid a $50-million deposit, and will sign a long-term off-take agreement with Shell Trading (US) Co. to purchase oil from the field for 30 years.

Delek joins Ceasar Tonga partners Anadarko Petroleum Corp. (operator, 33.75%), Equinor Gulf of Mexico LLC (23.5%), and Chevron USA Inc. (20.25%).

The field—covering 90 sq km over Blocks 683, 726 (S2 and E2NE4), 727, and 770—lies 300 km south of Louisiana in 1,500 m of water and contains eight wells connected by two pipelines to Anadarko’s wholly owned Constitution spar floating production facility in 5,000 ft of water on Green Canyon Block 680, which transports the oil and gas through an existing pipeline to the coasts of Louisiana and Texas. In 2009, Anadarko began modifying Constitution’s topsides to accommodate production from Caesar Tonga.

Current production from the field, which began in 2012, is 71,000 boe/d (total gross, 90% oil) (OGJ Online, Mar. 12, 2012). With no change in the current production rate and an expected field life of another 30 years, Delek’s interest is 78 million boe (2P) reserves.

Delek intends to obtain financing for the deal, mainly through reserve-based lending, from a consortium of international banks, for a total of $440 million.

The transaction is subject to, among other things, the right of first refusal possessed by the field’s other co-owners as well as regulatory authorizations. Closing is expected before Sept. 30.

Contact Mikaila Adams at mikaila@ogjonline.com.

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