Woodside to grow stake in Senegal JV

Woodside Petroleum has moved to acquire a majority stake in its Sangomar joint venture, paying $428 million to obtain UK-based explorer Cairn Energy’s interest in the project.

Russia-based energy conglomerate Lukoil had announced it would acquire Cairn’s 40 per cent stake in the project in July, however Woodside today announced it would exercise its right to pre-empt the sale.

Woodside will now reimburse Cairn’s development capital expenditure in accordance with the original agreement, as well as pay an additional $139 million to Cairn contingent on the commencement of production.

Announcing the news to the ASX this afternoon, Woodside chief executive Peter Coleman said the acquisition would protect shareholder interests by removing uncertainty that may have arisen if the US were to have sanctioned Lukoil.

“The strength of our balance sheet and our liquidity position have enabled us to take advantage of this opportunity,” Mr Coleman said.

“We will continue to apply our prudent approach to capital and balance sheet management, including consideration over the next 12 months of value accretive reduction in our equity interest in Sangomar.”

The Sangomar project, which is slated to begin production in 2023 and produce up to 100,000 barrels of oil and gas per day once online, is located about 100km south of Sengal’s capital of Dakar.

Woodside holds a 35 per cent interest in the JV and serves as its operator.

ASX-listed FAR and Senegal’s national oil company Petrosen are also part of the JV, holding a 15 and 10 per cent stake in the project, respectively.

Today’s announcement comes after Woodside last week posted a $5.7 billion loss in the first half of this year following a tougher than expected market caused largely by COVID-19 restrictions globally.

Shares in the company closed $20.37/share today, down $0.08 on opening.