Kosmos Completes Farm-Down Deal with Shell
Texan producer Kosmos Energy has closed a deal to farm down its interests in a number of exploration projects in Africa and Latin America to Shell for $195mn. the company said in a filing on December 10.
The deal covers interests in exploration blocks off Sao Tome & Principe, Suriname and Namibia. It includes a $95mn upfront payment and a further $100mn in contingency payments. The transaction, first announced in September, was also to involve acreage in South Africa, but that part of the deal is expected to be closed in 2021, Kosmos said.
"The proceeds enable Kosmos to strengthen the balance sheet while accelerating high graded exploration opportunities in proven basins," Kosmos CEO Andrew Inglis said. "The contingent payments locked into the agreement with Shell ensure we retain upside from frontier exploration with no further investment."
A third of the proceeds will go towards two high-quality infrastructure-led exploration prospects in the Gulf of Mexico, Kosmos said, while the remainder will go towards reducing its debt. Once the deal is fully complete Kosmos will be left with a "focused" exploration portfolio with 6bn barrels of gross resource potential in the Gulf of Mexico and West Africa. The company said in September it expected to save $125mn in capital expenditure and general and administration costs over the next two years thanks to the divestment.