Cairn has entered into a conditional agreement to sell its entire participating interest in the Senegalese stake, which includes: Rufisque Offshore, Sangomar Offshore, and Sangomar Deep Offshore.
The deal with Woodside Energy will be based on the same terms and conditions as the sale and purchase agreement entered into with Russian operator Lukoil on 24 July 2020. While Cairn was previously planning to sell its 40% stake in the Senegalese joint venture to Lukoil in a deal worth up to $400m, on 17 August 2020, Cairn announced that Woodside had exercised its right to pre-empt the transaction on the same terms and conditions.
Woodside Energy will hold a 68.3% stake in the main Sangomar deepwater project and a 75% stake in the remaining areas, as agreed by the companies. The operators have not reported any expected delays to the start of production caused by the Covid-19 pandemic and the oil price crash.
A final investment decision on the first phase of Sangomar was taken in January 2020. First oil is expected in 2023 and total recoverable oil resources are estimated at 500 million barrels, with a gas pipeline to shore being envisaged at a later date.
A general meeting is now scheduled for the deal to be put to shareholders on 23 September.
Cairn noted that as the proposed sale constitutes a ‘Class 1’ transaction under UK listing rules, it will need to be approved by shareholders, and is also subject to approval by the Government of Sénégal.
The news comes after Cairn cut its planned capital expenditure for 2020 by 23% in March, and has since then expressed confidence that it remains “well-funded,” with a reserves-based lending facility with undrawn funds of $575m and potential to borrow more if necessary.