Angola’s Sonangol buys Cobalt Oil assets for $1.75 billion

Aug 24, 2015 12:00 AM

Angola’s state-owned oil company agreed to acquire Cobalt International Energy Inc.’s 40 percent interest in discoveries off the nation’s coast for $1.75 billion.

Sociedade Nacional de Combustiveis de Angola, known as Sonangol, expects to receive government approval for the purchase of the stakes in blocks 21/09 and 20/11 before the end of the year, according to a statement Monday. Cobalt, a Houston-based deep-water oil explorer, will continue as operator for an interim period with Sonangol bearing all costs.

Cobalt has been searching for oil off the coast of Africa’s second-largest oil producer in geological formations that mirror a region offshore Brazil that yielded large oil discoveries. The explorer made its first oil discovery from the Cameia-1 well in block 21 in 2011.

“Over the past seven years, Cobalt International Energy has had outstanding exploration success in Angola’s pre-salt, which will accrue considerable prosperity to the Angolan people,” Francisco De Lemos Jose Maria, chairman and chief executive officer of Sonangol, said in the statement.

Cobalt and Sonangol plan to decide whether to proceed with an investment to develop the Cameia discovery by the end of this year, with first oil scheduled for 2018, according to the statement.

“Although the consideration is probably around in-line with what Cobalt has invested into Angola over time, in this market it seems a good price,” Tudor, Pickering, Holt & Co., a Houston-based investment bank, wrote in a note.

Brent crude, the international benchmark, fell below $45 a barrel Monday for the first time since 2009 amid a persistent supply surplus and concerns that economic growth in China is slowing.

Explorers drilled into oil reservoirs below a layer of salt more than two miles beneath the seabed off Africa’s coast following success in similar formations on the other side of the Atlantic. Petroleo Brasileiro SA made the Tupi discovery in the so-called pre-salt region in 2006, which was the biggest oil find in the western hemisphere since Mexico’s Cantarell field in 1976.

Cobalt’s portfolio is now focused on deep-water assets in the Gulf of Mexico, the company said in a presentation.

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