Sonangol, Cobalt Reach $500mn Settlement
Angolan state producer Sonangol and US independent Cobalt International have reached a $500mn settlement over their dispute.
It comes a week after Cobalt filed for bankruptcy protection in the US; Cobalt indeed notes that this settlement remains "subject to approval by the US Bankruptcy Court for the Southern District of Texas.”
The two companies announced December 19 they had signed an agreement to resolve all disputes and transition Cobalt’s interests in Blocks 20/11 and 21/09 offshore Angola to Sonangol for $500mn.
In May, Cobalt said it would pursue Sonangol for $2bn of compensation, after in 2016 the Angolan state company cancelled a $1.75bn deal to buy Cobalt’s 40% interests in the two offshore blocks where several large oil and gas discoveries had been made.
Both firms have now said an initial non-refundable payment of $150mn is to be paid by Sonangol no later than February 23 2018 with the final $350mn payment to be received no later than July 1 that year.
“We look forward to working with Sonangol to implement this agreement and wish them all the best in developing these world class assets,” said Cobalt CEO Timothy Cutt.
Sonangol chairman and CEO Carlos Saturnino replaced Isabel Dos Santos, the former Angolan president’s daughter, in his post only last month. He thanked Cutt and the Cobalt team for resolving the dispute, adding: “Sonangol will continue the development of strategies and actions with all stakeholders to relaunch the stability and attractiveness of the hydrocarbons industry in Angola.” Saturnino, in Sonangol's statement, added that the settlement was important, in terms of reassuring investors about the Angolan upstream industry's stability and credibility. The $1.75bn deal was cancelled by Dos Santos.
Cobalt said December 14 that it, and some of its US affiliates, had filed voluntary petitions for relief in Texas under Chapter 11 of the US Bankruptcy Code, and said then that it planned to use the opportunity to “continue and complete discussions with key stakeholders and evaluate other value-maximising opportunities to facilitate an expedited restructuring that will deliver maximum value to its stakeholders.”
The loss-making US firm said November 2 it was ready to sell itself outright, following its bruising dispute with Angolan state Sonangol. The $500mn settlement -- much less than the original $1.75bn price tag and the $2bn damages sought -- may reflect the fact that no offshore upstream development has been initiated since the Total-led Kaomba oilfield project in 2014, now expected to start producing in 2018.
Cobalt had made not only several major oil but also significant gas discoveries on its two Angolan blocks. Global consultancy Wood Mackenzie told NGW recently that, were Angola to monetise its offshore gas possibly as floating LNG, it could improve the oil export-dependent country’s prospects in the longer term – but that this could only happen if it offers acceptable terms to investors.
Sonangol chairman/CEO and Angola's petroleum secretary Carlos Saturnino (left shaking hands) exchanges the signed agreement with Cobalt International CEO Timothy Cutt (Photo credit: Sonangol)