Kosmos Confirms Deal to Sell Exxon Stake in Jubilee


Jubilee Field
(Click to Enlarge)

LAGOS, Nigeria (THE WALL STREET JOURNAL via Dow Jones), Oct. 12, 2009

Kosmos Energy said Monday it signed an exclusive deal with Exxon Mobil Corp. to sell its stake in a significant oil discovery off the coast of Ghana, the first confirmation from either company of the deal, said to be worth $4 billion.

"I can confirm that Kosmos has entered into an exclusive binding agreement with a third party (an affiliate of Exxon Mobil) in relation to the sale of its Ghana assets," Kosmos Senior Vice President and Chief Financial Officer Greg Dunlevy said in an email to The Wall Street Journal.

The announcement comes a day after it emerged that China National Offshore Oil Corp., or Cnooc, is in advanced talks with Ghana National Petroleum Corp. to make a rival bid for Kosmos' stake in the field, known as Jubilee.

Dunlevy did not disclose the deals' price tag, but sources told the Journal over the weekend that the deal was worth an estimated $4 billion.

Kosmos has not yet heard from representatives of Cnooc or GNPC regarding an offer for their stake in the field, estimated to hold 1.8 billion barrels of oil, a person close to the matter said. Kosmos is a privately held Dallas company backed by private-equity firms Warburg Pincus and Blackstone Group LP.

The Ghanaian government is angry at Kosmos for what it perceives is a flouting of its laws -- in particular the sharing of oilfield data. Ghana's oil minister and the head of GNPC have both said they do not consider the Kosmos-Exxon deal done, and that they have the right to cancel any contract.

Kosmos owns a 23.5% stake in Jubilee. Tullow Oil PLC owns 34.7% and is the operator. Anadarko Petroleum Corp. owns 23.5% and GNPC has a 13.75% stake. Two other companies hold very small positions.

Exxon has declined to comment on the matter in the past week and a spokesman didn't immediately provide a response to questions.

Negotiations between Kosmos and the Ghanaian government have long been rocky, people close to the matter say, and China's entry into the talks is sure to complicate things further.

In June, relations between Kosmos and Ghana officials hit a rocky patch when the Ghanaian minister of energy felt insulted during negotiations with Kosmos officials.

"He doesn't understand African courtesies when negotiating," the person said, referring to the Kosmos executive. "So he easily infuriated the minister. Once that happens, the minister might also take a harder stand."

A week later, the minister and the CEO happened to be seated next to each other on a flight to London and an awkward exchange took place before "everyone put on a brave face," according to the person.  

Copyright (c) 2009 Dow Jones & Company, Inc.

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