Woodside wraps up Senegal deal with Cairn

Woodside Energy has completed the acquisition of Capricorn Senegal Limited’s (Cairn) entire participating interest in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture.

Woodside entered into a binding sale and purchase agreement to acquire Cairn’s entire participating interest in the RSSD joint venture in September 2020.

The completion was subject to Government of Senegal approval, Cairn Energy shareholder approval, and other customary conditions precedent.

Following the receipt of all necessary approvals, the deal has now been completed.

The purchase price was $300 million plus a working capital adjustment of approximately $225 million, which included a reimbursement of Cairn’s development capital expenditure incurred since 1 January 2020.

Additional payments of up to $100 million are contingent on commodity prices and timing of first oil.

Woodside CEO Peter Coleman said on Wednesday that the acquisition of Cairn’s interest in the Sangomar project area offshore Senegal was value accretive for shareholders.

“The development of Sangomar is being executed according to schedule. The Senegal team recently achieved another milestone, with the award of the contract for the operations and maintenance of the floating production storage and offloading vessel which is targeted for delivery and first oil production in 2023.

“The completion of the transaction with Cairn has simplified the structure of the joint venture ahead of our planned equity sell-down in 2021. The Sangomar development is an attractive, de-risked asset that offers near-term production to potential buyers”, he said.

Woodside’s participating interest in the RSSD joint venture has increased to approximately 68.33 per cent for the Sangomar exploitation area and to 75 per cent for the remaining RSSD evaluation area.

Woodside’s interest will further increase to 82 per cent for the Sangomar exploitation area and to 90 per cent for the remaining RSSD evaluation area subject to completion of the FAR acquisition announced on 3 December 2020. Woodside will remain the operator.

Earlier this month, Cairn said it would return $250 million to shareholders following the sale of Senegal assets to Woodside.

Following the completion of this sale, Cairn will pay a special dividend of 32 pence per eligible ordinary share amounting to a return of approximately $250m to shareholders and complete consolidation of Cairn’s ordinary share capital.

The special dividend is expected to be paid on 25 January 2021 to those on the register on 8 January 2021.

In related news, the Indian government has been ordered to pay Cairn Energy $1.2 billion following an arbitration award in a tax dispute case.

According to Reuters, the amount is nearly equal to London-listed Cairn’s market value of $1.3 billion as of Tuesday’s close.