Andreas Sohmen-Pao’s BW Group has branched out again, this time entering the energy sector.
BW Offshore has in partnership with the BW Group entered into agreement to acquire 66.67% of the Dussafu production sharing contract offshore Gabon. Subject to closing of this first transaction, the partnership has secured a right to acquire a further 25% of the Dussafu license.
BW Offshore has formed a Singapore joint venture company with BW Group, known as BW Energy Holdings (BWEH), for the purpose of pursuing oil and gas interests. The JV is owned 66.67% by BW Offshore and 33.33% by Maple Company Limited, a wholly owned subsidiary of BW Group.
A wholly-owned subsidiary of BWEH, known as BW Energy Gabon (BWEG), has entered into a sale and purchase agreement with Harvest Energia to acquire its 100% interest in Harvest Dussafu, which owns a 66.667% interest in the Dussafu production sharing contract with an area covering 210,000 acres located offshore Gabon. Harvest Energia is a wholly-owned subsidiary of Harvest Natural Resource. The acquisition price is $32m in cash, subject to certain adjustments. Closing is expected to take place in the first quarter of next year.
The remaining 33.333% interest in the Dussafu block is owned by Pan-Petroleum Gabon, a subsidiary of the OSE-listed Panoro Energy. BWEG has also entered into a memorandum of understanding with Pan-Petroleum Gabon relating to the proposed acquisition of a further 25% interest in the Dussafu block for $12m in cash subject to the closing of the Harvest transaction. In connection with and subject to such acquisition from Panoro and Harvest, BWEH is in discussions with the Gabon Oil Company (GOC) for their participation.
“We have previously said that we are exploring partnerships and alternative commercial models. We are now starting to deliver on this strategy. We see the investment in the Dussafu block as an attractive opportunity with the potential to create significant value for the shareholders of BW Offshore”, said Carl Arnet, BW Offshore’s CEO.
“The drop in oil price over the past years has reduced the costs of drilling and subsea equipment significantly, which in turn has lowered the break-even price required for a Dussafu development,” BW maintained in a release today.
Following Gabonese license requirements, first oil is planned for 2018.
Arnet added, “The availability of production assets that match field requirements de-risks the development and makes it realistic to achieve first oil within 2018. The project economics are robust at and below the current oil price.”
BWEH plans to finance the acquisitions through use of internal funds. In addition to the acquisition price payable for the interests, the field development is estimated to cost a total of $150m until first oil.
This is not the first new company to come from Sohmen-Pao’s BW Group in 2016. In April, the group launched BW Dry Cargo, a unit that has chased plenty of dry bulk tonnage ranging in size from 50,000 dwt to 85,000 dwt in the past eight months.
Since taking over from his father, Helmut Sohmen, as chairman of BW Group in 2014, this year has been the one where Sohmen-Pao has truly stamped his mark on the group’s direction. The group is now involved in FPSOs, LPG, LNG, chemical, product and crude tankers, dry bulk and energy.