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GNPC-Aker deal offers good value for Ghana - Chief Executive Officer

Tue, 19 Oct 2021 Source: The Finder

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Ghana National Petroleum Corporation (GNPC) says the reported valuations of purchasing stakes in Aker Energy and AGM Petroleum Ghana Limited oil bloc can change depending on the outcome of the technical, financial, legal and commercial due diligence to create significant value for Ghana.

The Chief Executive Officer (CEO) of GNPC, Dr Kofi Kodua Sarpong, said the assembling of the transaction and other advisors were underway.

“Due diligence-driven valuation would determine the actual purchase price to be agreed by the Ministers for Finance and Energy,” he stressed.

717m barrels confirmed

The two blocs have contingent resources of 717 million barrels confirmed with substantial prospects in the two blocs, especially SDWT with about four billion barrels of oil.

5.117bn barrels of contingent and prospects

Estimates indicate that contingent and prospects in both blocs could be 5.117 billion barrels of crude oil.

GNPC valuation excluding Pecan Phase 2 is $2bn

Dr Sarpong explained that the original GNPC valuation, excluding Pecan Phase 2, gave the lowest valuation of the two blocs, pegging it $2 billion.

GNPC Explorco’s share valued at $1.6bn

Out of this amount, he said GNPC Exploration & Production Company Limited’s (Explorco) share is valued at $1.6 billion.

GNPC valuation including Pecan is $2.29bn

However, he explained that after adjusting for Pecan Phase 2, GNPC’s valuation of the two blocs rose to $2.29 billion, out of which Explorco’s share also inched up to $1.79 billion.

On the other hand, he said Aker Energy and AGM valuation of the two blocs included Pecan Phase 2 and gives the highest valuation for the two blocs.

Aker/AGM valuation is $3.05bn, Explorco’s share is $2.43bn

He noted that Aker and AGM placed $3.05 billion value on the two blocs, out of which GNPC Explorco’s share is valued at $2.43 billion

Valuations of 3 independent firms is between $2.25bn and $2.55bn

Dr Sarpong explained that valuations of three independent firms – Pareto Securities, Arctic Securities and Lambert Energy Advisory – ranged between $2.25 billion and $2.55 billion.

Arctic Securities valuation - $2.410bn

Arctic’s valuation pegged Aker and AGM blocs at $2.410 billion and GNPC Explorco’s share is entitled to $1.860 billion.

Pareto Securities valuation - $2.250bn

Pareto valued the two blocs at $2.250, out of which GNPC Explorco’s share is $1.780 billion.

Lambert Energy Advisory valuation- $2.550bn

The valuation of Lambert pegged the two blocs at $2.550 billion, while valuing GNPC Explorco’s share at $1.990 billion.

GNPC valuation falls within figures of 3 independent firms

Dr Sarpong explained that GNPC valuation adjusted for prospects and Pecan Phase 2 of $2.29 billion falls within the Pareto, Arctic and Lambert valuation range.

Arctic and Pareto commissioned by Aker/AGM

Arctic and Pareto were commissioned by Aker and AGM, while Lambert was commissioned jointly by Aker, AGM and GNPC.

Lambert jointly commissioned by Aker/AGM and GNPC

He announced that GNPC and Aker/AGM have agreed to use the Lambert valuation as a reference point for negotiation.

$1.605.9bn costs during Aker/AGM acquisition

Total cost available on the acquisition of the Aker/AGM blocs is $1.605.9 billion, comprising $893.8 million as the cost Aker acquired Hess, $445.2 million as total cost Aker incurred since it purchased the bloc up to June 30, 2021 as well as $266.9 million AGM incurred since it purchased the bloc up to June 30, 2021.

$1.21bn Hess development cost

The data shows that Hess development cost at the time of acquisition by Aker amounted to $1.21 billion, while Aker’s share of this cost was $893.75 million.

$712.1m post-acquisition cost incurred by Aker and AGM

It shows that the post-acquisition cost incurred by Aker and AGM acceptable to GNPC is $712.1 million.

GNPC share of development cost is $1.224.3bn

Dr Sarpong noted that GNPC Explorco’s share of this development cost on acquisition would amount to $1.224.3 billion.

This, he said, would comprise share of Hess cost ($661.4 million), share of post Hess acquisition by Aker ($ 329.4 million) and share of AGM cost ($223.5 million).

$1.22bn to be recovered will remain in Ghana

He reminded Ghanaians that with the acquisition, the amount of $1.22 billion to be recovered by GNPC Explorco will remain in Ghana.

Aker substantial deepwater experience and technology

He disclosed that Aker has substantial deepwater experience and technology to allay fears regarding the death of one of the blocs.

GNPC Explorco to acquire deepwater technology

According to him, GNPC Explorco would be able to use deepwater technology to develop targeted fields and other fields in the Ghanaian basin, since most of Ghana's oil is in deep waters.

Operatorship capacity

Dr Sarpong explained that the intended acquisition by GNPC Explorco into Aker and AGM offers an opportunity for GNPC to acquire operatorship capacity to enable it to play a major role as an exploration and production company.

According to him, the partnership would enable GNPC and Ghana to, not only face the emerging energy transition in a well-prepared manner but also create significant value for Ghana.

Financing of GNPC Explorco’s share of Capex to First

He stated that GNPC Explorco’s share of Capex to Pecan Phase 1A first oil was $350 million, comprising $150 million of GNPC annual budget for three years, including recovery of debts and $200 borrowed from local banks with disbursement over three years.

The GNPC CEO noted that payment would be staggered for at least three instalments, namely at the signing of the deal, approval of the plan of development, and first oil involving the securitisation of crude oil.

Source: The Finder