Cairn reported that in the event that no other JV parties pre-empt prior to the deadline of August 26, 2020 then Woodside would acquire its 40 per cent interest in the project.
Woodside’s acquisition remains subject to Government of Senegal approval, Cairn Energy shareholder approval and other customary conditions precedent.
The acquisition will be funded from Woodside’s current cash reserves, with the company’s equity interest in the RSSD joint venture after completion of the acquisition set to increase to 68 per cent and remain operator.
Woodside chief executive officer Peter Coleman said the acquisition represented an opportunity for the company to deepen its interest in a well understood, world-class asset with near-term production, while also protecting shareholder interests by removing the potential uncertainty of US sanctions applying to the Sangomar field development.
“Progressing the Sangomar field development and delivering targeted first oil in 2023 is an important part of Woodside’s growth strategy. Increasing our interest maintains the early momentum achieved since achieving final investment decision with our joint venture partners earlier this year and will simplify the equity structure for the RSSD joint venture,” Coleman said.
Cairn Energy CEO Simon Thomas added: “We look forward to completing the transaction with Cairn and working with all stakeholders, including potential new joint venture partners, to successfully deliver Senegal’s first oil project.
“Our discoveries were the country’s first deep-water wells and opened up a new basin play on the Atlantic Margin. What’s more, they successfully laid the foundations for Senegal’s first oil and gas development, which will deliver enduring benefits to its people.
“With a strong balance sheet, low breakeven production and limited capital commitments, Cairn will have enhanced financial flexibility to invest in and grow the business whilst always remaining committed to returning excess cash to shareholders.”