Russia’s independent Lukoil has struck a deal to pay $300 million to Cairn Energy for a 40% stake in a licence offshore Senegal.
The Russian company said it would pay the sum in cash, with another potential bonus payment of up to $100mn once production had started.
Cairn said Lukoil would also pay for costs incurred since January 1. Its share of the budget for 2020 is $330mn. The Scottish company intends to return at least $250mn to shareholders via a special dividend.
The deal requires various conditions to be met, including approval from the Senegalese government. Completion is expected in the fourth quarter of the year.
“The planned special dividend from the sale of the Sangomar asset reflects Cairn’s long-standing strict capital allocation strategy of active portfolio management and returning cash to shareholders,” said Cairn’s CEO Simon Thomson.
Cairn has a 40% stake in the Rufisque, Sangomar and Sangomar Deep (RSSD) licences. They cover 2,212 square km, around 80 km from shore. Water depths range from 800 to 2,175 metres.
On track
The partners have found two fields on the licences, Lukoil noted, Sangomar and FAN. While the commerciality of the latter is unclear, Sangomar is on course to start production in 2023. Partners took the final investment decision (FID) on the 100,000 barrel per day field in January this year.
Sangomar has recoverable reserves of around 500 million barrels of oil equivalent.
Lukoil’s president Vagit Alekperov said acquiring a project “with already explored reserves at early stage of their development is fully in line with our strategy and allows us [to reinforce] our presence in West Africa. Joining the project with qualified international partners will allow us to gain additional experience in development of offshore fields in the region.”
Australia’s Woodside is the operator of the area with a 35% stake, having bought the interest from ConocoPhillips. Minnow FAR has a 15% stake in the licences. The company has been unable to finance its share of spending on Sangomar and is in default. FAR is looking for a sale.
State-owned Petrosen has the remaining 10%.
Read More: Cairn sells Sangomar stake to Lukoil – News for the Oil and Gas Sector
