(Alliance News) - Kosmos Energy Ltd said Thursday it has acquired an additional 18% stake in the Jubilee field and an additional 11% interest in the TEN fields in Ghana from US oil firm Occidental Petroleum Corp for USD550 million.
Chair & Chief Executive Andrew Inglis said: "This is a compelling transaction for Kosmos that accelerates our strategic delivery and is expected to provide long-term sustainable cash flow from fields where we have a deep understanding of the value and future upside."
Kosmos expects the fields to deliver cash generation of about USD1 billion of incremental free cash flow by the end of 2026 at USD65 per barrel of oil.
"We plan to use the additional cash flow from these assets to reduce absolute debt levels and fund our growth in LNG," Inglis said.
Kosmos now holds a 42% stake in Jubilee and 28% in TEN.
Using the firm's year-end 2020 reserves report, estimated 2P reserves being acquired are about 104 million barrels of oil equivalent.
Inglis continued: "Financially, the transaction is highly accretive across all key metrics, including free cash flow, and accelerates our committed path to deleveraging the balance sheet. With significant net asset value accretion for the company, we believe that this transaction will deliver substantial returns to our shareholders."
The acquired assets are currently producing about 17,000 barrels of oil per day net and are expected to generate about USD325 million of earnings before interest, taxes, depreciation and amortization in 2022 at USD65 Brent.
To fund the transaction, Barclays and Standard Chartered Bank have provided Kosmos with a USD400 million bridge loan, which the company expects to refinance with the proceeds from a future senior notes offering. The remaining consideration was funded from available liquidity, which the company expects to re-finance with the proceeds from the equity offering of about USD100 million which was announced separately Thursday.
Kosmos is offering 37.5 million shares, and has offered the underwriters of the placing an additional 5.6 million shares.
"The transaction creates a simplified and aligned partnership in both the Jubilee and TEN fields, with both Kosmos and GNPC increasing their ownership. The partnership is committed to investing in both fields to maximize the value of the assets and reduce the carbon intensity of operations for the benefit of all stakeholders," Inglis added.
Shares in Kosmos Energy were untraded in London on Thursday but last closed at 233.00 pence each.
By Paul McGowan; paulmcgowan@alliancenews.com
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Kosmos Energy (KOS)