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Kosmos Energy has signed an agreement to sell a package of offshore exploration interests to Royal Dutch Shell subsidiary B.V. Dordtsche Petroleum Maatschappij.

Shell will acquire the company’s blocks offshore São Tomé & Príncipe, Suriname, Namibia, and South Africa.

The agreement terms comprise an upfront cash payment of $100m, along with a contingency payment of $50m payable following each commercial discovery from the first four exploration wells drilled across the assets, capped at $100m in total.

Three of the four wells are due to be drilled next year.

Kosmos Energy chairman and CEO Andrew G Inglis said: “With this transaction, we are continuing to focus our exploration portfolio on proven basins that offer superior returns with shorter payback and significant resource potential.

“The proceeds enable Kosmos to accelerate high graded exploration opportunities while strengthening the balance sheet, positioning Kosmos to create additional shareholder value.

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“The contingent payments locked into the agreement with Shell ensure we retain upside from frontier exploration with no further investment.”

Kosmos noted that it plans to use up to one-third of the initial sale proceeds to test two infrastructure-led exploration prospects in the Gulf of Mexico (GoM).

The company expects to realise $125m in total savings across capital expenditures over the next two years after the completion of the transaction.

Expected to be completed in the fourth quarter of this year, the transaction is, however, subject to customary closing conditions, including necessary government approvals.

In February, Kosmos Energy and its partners reached an agreement with BP Gas Marketing for the supply of liquefied natural gas (LNG) from the Greater Tortue Ahmeyim project in offshore Mauritiana and Senegal.