Chevron Corp has received a notification from Etu Energias that Etu Energias is exercising its pre-emption right in an agreement under which Chevron is selling its interests in 2 producing oil and gas licenses offshore Angola to Energean PLC.
However, the transaction between United States energy giant Chevron and London-based Energean remains in effect until Angola’s Etu Energias closes out the pre-emption transaction, Energean said in a stock filing Wednesday.
Under the deal announced earlier this year, which has an initial base payment of $260 million in cash, Energean is to acquire Chevron’s 31 percent operating stake in Block 14 and 15.5 percent non-operating stake in Block 14K.
As a co-venturer in the blocks Etu Energias holds a right of first refusal, which prevents a partner from selling ownership to an outsider when a co-venturer offers to buy the stake being transacted.
As of the date of the announcement of Energean’s agreement with Chevron, March 12, Etu Energias owned 29 percent in Block 14. BP PLC and Eni SpA’s equally owned joint venture Azule Energy held 20 percent. Sociedade Nacional de Combustíveis de Angola EP (Sonangol) had 20 percent.
In Block 14K, Etu Energias owned 14.5 percent as of the period. Trident Energy held operatorship with a 15.75 percent stake. Azule Energy owned 10 percent, Sonangol 10 percent and the Republic of the Congo’s Société Nationale des Pétroles du Congo 7.5 percent.
Energean said Wednesday “any assignment to Etu Energias must be made on the same or equivalent terms as the sale and purchase agreement between Energean and Chevron”.
“This includes the condition precedent requiring the buyer to deliver evidence to the seller that it is a proven deepwater oil and gas operator of at least one existing deepwater producing asset in water depths greater than 300 meters [984.25 feet], both within 15 days after signing and as at the unconditional date”, Energean said.
Block 14 produces about 42,000 barrels per day (bpd) through nine fields, of which 13,000 bpd is for Chevron, according to the March announcement. The block had net proven and probable (2P) reserves of 28 million barrels, Energean said then.
“Production is processed through the BBLT (Benguela, Belize, Lobito and Tomboco) and TL (Tombua-Landana and Landana North) hubs, which together provide significant spare oil processing capacity, along with substantial gas processing and water‑injection capabilities”, Energean noted.
“The block offers multiple low-risk and near-term opportunities to optimize and maximize existing production, as well as mid-term drilling targets that can be tied back into the existing infrastructure, including the PKKB development, which has significant upside potential”.
Block 14K contains the producing Lianzi oilfield. Lianzi, tied back to Block 14 infrastructure, produces approximately 2,000 bpd, of which about 1,000 bpd is for Chevron, Energean noted.
“The acquisition of a producing oil portfolio in Angola’s world-class hydrocarbon basin, highlighted by major recent discoveries, marks a landmark moment for Energean. It represents our first major investment in West Africa and is in line with our strategic focus on disciplined growth and geographic diversification”, Energean chief executive Mathios Rigas said at the time.
Besides the initial base payment, Energean agreed to contingent payments of up to $25 million a year, capped at $250 million in aggregate. The contingent payments “may become payable up until 2038 in relation to the potential future PKBB development, contingent on both realized oil prices and production being over certain thresholds”, Energean said.
The March announcement estimated the completion date of Energean’s acquisition to be 2026. Besides the waiver of pre-emption rights, closing conditions include regulatory approvals, Energean said.