KOSMOS Energy Ups Stake in Jubilee

US oil independent and Jubilee Technical Operator, Kosmos Energy Ghana HC, has announced that it has exercised its right under the existing Joint Operating Agreement (JOA), to acquire the participating interest of Sabre Oil and Gas Holdings Limited in the Deepwater Tano Block, offshore Ghana.

A release by Kosmos said at a purchase price estimate of approximately $365 million, the price has an additional $45million which is contingent upon the attainment of certain milestones.

The announcement by Kosmos, however comes as no surprise to industry watchers, who have followed with keen interest Sabre Oil & Gas Holdings Limited quest to sell its interest in Ghana’s oil, spread between the Deepwater Tano and West Cape Three Points blocks, over the past year.

Under the JOA, a partner can exercise a pre-emptive right over a partner’s interest in only one block at a time, giving notice to other partners. What this means is that it is only Tullow Ghana Limited, Ghana National Petroleum Corporation (GNPC) or Anadarko can exercise such a right over Sabre Oil & gas Holdings’ interest in West Cape Three Points.

At the close of the deal, Kosmos’ interest in the Deepwater Tano Block will increase from 18 percent to 22.05 percent, whilst its interest in the Jubilee Field will increase from 24.1 percent to 25.8 percent.

Brian F. Maxted, President and Chief Executive Officer, commenting on the prospects, said “We feel very fortunate to have an opportunity to grow our interest in what we believe are some of the most valuable assets in West Africa at a compelling price.”

Continuing, the Kosmos President said “This transaction adds existing production at Jubilee, enhances our stake in the next oil development offshore Ghana, and increases our exposure to the significant Deepwater Tano exploration program in 2012. We have great belief and confidence in the quality, value, and upside of our discoveries and the further potential of the Tano basin petroleum system.”

Even though Kosmos expects the closing of the transaction to occur in the second quarter of 2012, this would be subject to a definitive transaction agreement, customary closing conditions and necessary government approvals, the release said.

Kosmos says it anticipates funding the purchase price through a combination of cash on hand and borrowings, in the transaction which has January 1, 2012 as the effective date of acquisition.

The Joint Operating Agreement (JOA), covering the Jubilee Field, entered among the partners on 13th July, 2009, with Tullow Oil, Kosmos Energy Ghana, Anadarko, Sabre Oil & Gas Holdings.

Kosmos Energy, an affiliate of Kosmos Energy Ghana, listed on the New York Stock Exchange last year and has given indications of listing on the Ghana Stock Exchange.

The transfer provisions under the JOA ensures that such transactions do not leave in their trail liabilities of exiting parties and requires the consent of all other partners to be effective.

The deal must then finally be consented to by GNPC and the Minister of Energy.

Sabre Oil & Gas Holdings Limited is owned by Irish and Ghanaian partners, and its director, Kofi Esson, signed the JOA as ‘Attorney in fact’. thebusinessanalystgh@gmail.com