BW Offshore and the BW Group entered into agreement to acquire 66.67% of the Dussafu production sharing contract offshore Gabon.
Subject to closing of this first transaction, the partnership has secured a right to acquire a further 25% of the Dussafu license.
BW Offshore has formed a joint venture company with BW Group, known as BW Energy Holdings (BWEH), for the purpose of pursuing oil and gas interests. The JV is owned 66.67% by BW Offshore and 33.33% by Maple Co. Ltd., a wholly owned subsidiary of BW Group.
A wholly-owned subsidiary of BWEH, known as BW Energy Gabon Pte. Ltd. (BWEG), has entered into a sale and purchase agreement with Harvest Energia B.V. to acquire its 100% interest in Harvest Dussafu B.V., which owns a 66.667% interest in the Dussafu production sharing contract with an area covering 210,000 acres located offshore Gabon. Harvest Energia B.V. is a wholly-owned subsidiary of Harvest Natural Resource, Inc.The acquisition price is US$32 million in cash, subject to certain adjustments.
Closing of the transaction is subject to fulfilment or waiver of conditions precedents, including among others, approval by the stockholders of Harvest Natural Resource, Inc. and approval from the government of Gabon. It is estimated that closing will take place in Q1 2017.
The remaining 33.333% interest in the Dussafu block is owned by Pan-Petroleum Gabon B.V. (PPGBV), a subsidiary of the OSE-listed Panoro Energy ASA. BWEG has also entered into a memorandum of understanding (MOU) with PPGBV relating to the proposed acquisition of a further 25% interest in the Dussafu block for $12 million in cash subject to the closing of the Harvest transaction. In connection with and subject to such acquisition from Panoro and Harvest, BWEH is in discussions with the Gabon Oil Co. (GOC) for their participation.
"We have previously said that we are exploring partnerships and alternative commercial models. We are now starting to deliver on this strategy. We see the investment in the Dussafu block as an attractive opportunity with the potential to create significant value for the shareholders of BW Offshore," said BW Offshore CEO Carl K. Arnet.
The drop in oil price over the past years has reduced the costs of drilling and subsea equipment significantly, which in turn has lowered the break-even price required for a Dussafu development. Following Gabonese license requirements, first oil is planned for 2018, BW Offshore said.
"The availability of production assets that match field requirements de-risks the development and makes it realistic to achieve first oil within 2018. The project economics are robust at and below the current oil price," Arnet said.
BWEH plans to finance the acquisitions from Harvest Energia B.V and PPGBV through use of internal funds. In addition to the acquisition price payable for the interests, the field development is estimated to cost a total of $150 million until first oil.
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