A consortium of Luanda-based independent Somoil and UK junior Sirius Petroleum has signed a $335.5 million deal with Angola’s state oil company Sonangol to acquire minority stakes in two producing blocks in the Congo basin and one exploration tract in the Kwanza basin.
The agreement is part of a multi-block, competitive farm out process undertaken by Sonangol as it tries to reduce its financial exposure to upstream spending and boost production.
The sale and purchase agreement (SPA) was signed with the state player’s upstream subsidiary Sonangol P & P and covers the acquisition of 8.28% and 10% stakes, respectively, in BP-operated blocks 18 and 31, plus a 25% interest in Block 27.
The consortium will pay $170 million to enter block 31 and $165 million to get into block 18, while paying $500,000 to farm in to frontier block 27.
This deal is subject to due diligence plus other approvals and is due to complete this year, London-based Sirius said, with the two companies expected to finance the agreement via new debt facilities.
Assuming the agreement is finalised, the consortium will secure access to about 15,500 barrels per day of oil and significant cash flow entitlement given low operating costs and unrecovered costs, according to Sirius.
Sirius chief executive Bobo Kuti said: “The acquisition of these interests in such world-class producing assets, operated by a supermajor, is in line with our strategy to build a high-quality portfolio of African producing and development assets. We are excited by the long-term growth upside that these assets present and the scale that they bring to the Sirius platform.
“We have developed a very strong working partnership with Somoil in Angola and look forward to working together as we progress to the completion of this acquisition and to building a significant presence together in Angola.”
Output from Block 31 is currently producing about 80,000 bpd, all from the PSVM floating production, storage and offloading vessel.
Sirius — which is active in Tunisia and Nigeria — cited BP data as saying proven, probable and contingent reserves related to PSVM stand at 275 million barrels, with an extra 516 million barrels of contingent resources held in other discoveries, according to Gaffney, Cline & Associates.
Block 18 is also producing about 80,000 bpd from the Greater Plutonio FPSO which taps six fields.
BP estimates proven, probable and contingent reserves of 220 million are housed in these six fields.
As for Block 27, Sirius said the basin is known for its gas potential.
A group comprising Namibian state oil company Namcor, London-based Sequa Petroleu and local player Petrolog are also set to sign an SPA for Block 27 covering a 35% stake.
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