Cobalt Says Angolan Sale Terminated
US independent Cobalt International officially announced August 23 that its $1.75bn divestment of its 40% stake in Angolan blocks 20 and 21 to the country's state oil producer Sonangol was "automatically terminated pursuant to its terms" on August 22.
The closing of the sale was subject to Angolan government approvals, which were never granted.
"As the requisite Angolan government approvals were not received within one year, the purchase and sale agreement automatically terminated," said Cobalt's August 23 SEC filing, noting that it "plans to work with Sonangol to understand and agree on the financial and operational implications of the termination. The company has begun the marketing and sale process of its Angolan assets." Sonangol holds 30% in block 20 and 60% in block 21.
The sale to Sonangol was dead since Cobalt announced August 2 that it was "unlikely" it would go ahead in its original form; Cobalt's share price tanked by 30% on August 2 but has largely recovered to its August 1 level since.
Timothy J. Cutt was appointed Cobalt's new CEO, effective July 2 2016 (Photo credit: Cobalt International)
Sonangol had previously paid Cobalt $250mn. However Cobalt also spent money over the past year on continued drilling operations on the oil-rich blocks, on the basis these would be refunded by the buyer upon completion, and made a 2.8 trillion ft³ gas discovery on block 20/11.
It is not clear if Cobalt will be due a penalty payment from Sonangol. There was no mention of this in its SEC filing.
Mark Smedley