Mergers & Acquisitions Upstream

Kosmos Energy consolidates interests in Ghana’s producing Jubilee and TEN fields

The FPSO Prof. John Evans Atta Mills serves as the production hub for the TEN Fields and is able to process 80,000 bopd.

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Kosmos Energy has just announced the close of a transaction by which it has acquired an additional 18% in the Jubilee Field and an additional 11% in the TEN Fields in Ghana from Occidental Petroleum (OXY) for a price of $550m.

Both assets were previously chased by TotalEnergies as part of its broader acquisition of Anadarko Petroleum’s assets in Africa. However, the French major and OXY had mutually agreed in May 2020 to execute a waiver of the obligation to purchase and sell them, so that OXY could begin marketing their sale to other third parties.

Both fields are served by a different floating, production, storage and offloading (FPSO) vessel and are operated by Tullow Oil. Jubilee achieved first oil in 2020 and produced an average of 71,000 barrels of oil per day (bopd) in Q2 2021 with production currently increasing as a result of an ongoing drilling campaign. TEN achieved first oil in 2016 and produced an average of 37,000 bopd in H1 2021.

Source: PIAC

Kosmos Energy is familiar with both assets and has been present in the licences since the exploratory phase several years ago. Subject to pre-empty rights, the transaction could increase the company’s interests in Jubilee to 42.1% and in TEN to 28.1%.

Both projects have significant remaining potential and form the core of Tullow Oil’s growth and cash generation strategy this decade. “The acquired assets are expected to generate about $1bn of free cash flow by the end of 2026 at $65/bbl Brent,” Kosmos Energy said in a statement. The American independent also expects payback in less than three years if oil prices remain at an average of $65/bbl or above.

By simplifying the partnerships that run both fields, maintaining the pace of investments to develop additional reserves is also expected to be easier. A key focus will notably be on additional gas monetization from both fields in order to support Ghana’s gas-to-power industry.

Full details on both the Jubilee and TEN Fields Development are available in the “Projects” section within your Hawilti+ research terminal.

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Total Eren signs Shareholders Agreement for 35 MW solar PV project in Angola

Sonangol, Total Eren, and Greentech – Angola Environment Technology Ltd (Greentech) have announced that they executed last week the Shareholders Agreement establishing their partnership on the 35 MWp Quilemba Solar project in Angola. According to the agreement, Sonangol will be acquiring a 30% interest in Quilemba Solar Lda, while Total Eren and Greentech will own 51% and 19% respectively. The plant will be constructed in Lubango, capital of Angola’s Huíla Province. It has been in the making since late 2020, when Total Eren and Greentech signed a Memorandum of Understanding (MoU) with the Angolan Ministry of Energy and Water (MINEA) for the its construction and operation. Quilemba Solar is one of many utility-scale solar projects currently being developed in Angola, in line with the country’s vision to commission up to 500 MW of renewable energy capacity between 2022 and 2025. Italian major Eni is also involved in the development of a 50 MW solar PV plant in the country at the Bibala Municipality in the Namibe Province under a joint-venture with Sonangol called Solenova. Earlier this year, the consortium of Sun Africa, MCA Solar Angola and Hitachi ABB Power Grids also broke ground on 370 MW of solar PV projects in the country. These are split across seven different facilities now under-construction, including the 188.88 MWdc Biopioa solar plant and the 96.70 MWdc Benguela solar plant. Last month, Sun Africa took its commitment to Angola a step further with the signing of a memorandum of understanding for the development of Africa’s largest mini-grid and rural electrification project at a cost of $1.5bn. Full details on Sun Africa, Total Eren and Solenova’s solar projects in Angola are available in the “Projects” section within your Hawilti+ research terminal.

Angola has already surpassed its oil revenue target for 2021

With a new record-high oil revenue in Q3 2021, Angola has collected over Kz 4.2 tn in oil revenue this year so far, data compiled by Hawilti from the country’s Ministry of Finance shows. This is already higher than its oil revenue target of Kz 4.059 tn set within its 2021 budget. “In the first nine months of 2021, Angola had already collected more revenue from oil than it did in twelve months in 2019 and 2020,” said Mickael Vogel, Head of Research at Hawilti. Angola is known for being conservative and realistic in its budget estimates and had set its oil price reference for the year at $39/bbl. In comparison, the Girassol Blend started the year at $55.84/bbl on average in January and stood at over $74/bbl on average in September, according to OPEC data. This explains why despite decreasing output, Angola has posted a strong performance in oil revenue collection this year. Source: Ministry of Finance The country’s total ordinary petroleum receipts comprise of the IRP (petroleum income tax), the IPP (tax on petroleum production), the ITP (tax on petroleum transactions) and additional concessionaire’s revenue. Angola’s ability to meet its oil revenue target notably contrasts with that of Nigeria. Just last week, President Buhari declared that the Federal Government of Nigeria’s share of oil revenue was 51% below target as of July 2021 due to disappointing production levels. However, and despite strong oil revenue collection, Angola’s oil sector continues to underperform due to lack of investments in the past decade. Oil production in 2021 was initially budgeted at an average of 1,220,400 bopd before it was revised down in the middle of the year to 1,193,420 bopd.