Kosmos Energy formed ties with the UK-based energy giant BP through a $916 million farm-out of assets in the Mauritania-Senegal basin where Kosmos is planning a “world-class” LNG project.
Under the terms of the agreement, BP will assume named operatorship and acquire a 62 percent working interest in Kosmos’ licenses covering blocks C6, C8, C12, and C13 offshore Mauritania. BP will also buy an effective 32.49 percent working interest in the licenses covering the Saint Louis Offshore Profond and Cayar Offshore Profond blocks offshore Senegal.
Kosmos said in its statement on Monday it will maintain a 28 percent and 32.51 percent effective working interest in the licenses offshore Mauritania and Senegal, respectively, and will continue as exploration operator.
Kosmos will receive a $162 million upfront payment, $221 million carry on exploration and appraisal, including a drill stem test on Tortue expected to be completed in 2017 and $533 million maximum carry on development costs until first gas production on the Tortue project. Kosmos said it expects a front end engineering and design study to be completed in 2017 with the objective of reaching a final investment decision by 2018.
Kosmos will also receive a contingent bonus of up to $2 per barrel, for up to 1 billion barrels of liquids, structured as a production royalty, subject to a future liquids discovery and oil price.
Speaking of the partnership with BP, Andrew Inglis, Kosmos Energy’s chairman and CEO said that “BP emerged as the right partner to help us advance the Tortue gas project at pace and take forward a multi-well exploration program that will test the basin’s liquids potential beginning in mid-2017.”
He noted the company is combining its exploration expertise with BP’s deepwater development, and LNG production and marketing experience.
In a separate statement, BP chief executive officer Bob Dudley said that the company’s entry into Mauritania and Senegal represents “an exciting strategic opportunity to work with Kosmos Energy in an emerging world-class hydrocarbon basin.”
“We believe our expertise in integrating the gas value chain, together with a talented exploration partner in Kosmos, along with the support of the Mauritanian and Senegalese governments brings together all the elements needed to create a new LNG hub in Africa.”
In order to reduce development time and drive capital efficiency, the partners plan to process and transport the gas from Tortue at a nearshore LNG facility. The proposed complex could be expanded in phases to accommodate future gas discoveries.
Additionally, Kosmos and BP have entered into an exclusive exploration partnership covering potential new ventures opportunities in Mauritania, Senegal and The Gambia. Kosmos will remain exploration operator of all new ventures acquired within the areas of interest, while BP will become development operator.