The Woodside Petroleum Limited (ASX: WPL) share price is edging higher today after the company announced it has completed the Sangomar acquisition.
At the time of writing, the energy giant's shares are up 0.85% at $22.51.
Quick take on the Sangomar project
Woodside's recently acquired Sangomar project contains both oil and gas, and is located 100km south of Dakar, Senegal. The project covers a combined area of 7,490sq km within the Senegalese portion of the Mauritania-Senegal-Guinea Bissau Basin. It is said to be one of the world's largest oilfields discovered in the last decade.
While work has already started earlier this year, first oil production is being targeted by 2023. Phase one is expected to be around 100,000 barrels of oil per day. In total, it is estimated that the Sangomar offshore oil project is worth around $6 billion.
What did Woodside announce?
In today's release, Woodside advised that it has completed the acquisition of the entire participating interest of Capricorn Senegal Limited (Cairn) in the Rufisque Offshore, Sangomar Offshore and Sangomar Deep Offshore (RSSD) joint venture.
Woodside spent US$300 million plus a working capital adjustment of US$225 million to complete the transaction. In addition, the company is expecting up to US$100 million of further payments depending on the price and timing of first oil production.
With the deal all wrapped up, Woodside's equity interest lifted to 68.33% in the Sangomar exploitation area and to 75% for the remaining RSSD evaluation area. However, the company's stake could further increase should the FAR Ltd (ASX: FAR) acquisition also be finalised. This would bring Woodside control of 82% for the Sangomar region and 90% of the RSSD area.
What did management say
Commenting on the acquisition, Woodside CEO Peter Coleman said:
The development of Sangomar is being executed according to schedule. The Senegal team recently achieved another milestone, with the award of the contract for the operations and maintenance of the floating production storage and offloading vessel which is targeted for delivery and first oil production in 2023.
The completion of the transaction with Cairn has simplified the structure of the joint venture ahead of our planned equity sell-down in 2021. The Sangomar development is an attractive, de-risked asset that offers near-term production to potential buyers.
Woodside share price performance
The Woodside share price is down 35% from the past 12 months, which could be seen as an attractive discount for shareholders. While energy companies have been battered from COVID-19, the industry is slowly on the mend. From March lows, the Woodside share price has gained more than 50%.
Woodside has a market capitalisation of $21.4 billion.
