UK-based oil and gas company Capricorn Energy is keeping its hopes up that Woodside's Sangomar offshore oil project in Senegal will produce the first oil by June 30, 2024, making it eligible for contingent pay of up to $50 million.
In December 2020, Scotland-based Capricorn Energy sold its 40% stake in the Sangomar project to Woodside. Under the terms of the contract, additional payments of up to $100 million were contingent on the timing of the first oil from Sangomar field, and commodity prices in the first six months of production.
Woodside had initially targeted the first oil for late 2023, making Capricorn's hopes of getting $100 million possible. But the target was readjusted by Woodside earlier in 2023, stating it expected mid-2024 for Sangomar’s first oil production.
The production target timeline was reconfirmed this Wednesday by Woodside CEO Meg O’Neill as the Léopold Sédar Senghor FPSO, which will be employed on the project, set sail to its final destination, located approximately 100 kilometers offshore Dakar.
This cut Capricorn’s expected contingent fee in half – making it eligible to receive a payment of either $25 million or $50 million if the average Brent oil price during the first six months of production exceeds the $55 per barrel or $60 per barrel thresholds and first oil is achieved in the first half of 2024, as defined in the sale purchase agreement.
“If first oil is achieved prior to 30 June 2024, the contingent payment is anticipated in early 2025 once the average oil price has been determined and there has been 30 days of continuous production,” Capricorn said in a statement.
First oil is defined as the first continuous 72-hour period of production from the Sangomar Field during which at least a total of 30,000 barrels is produced for sale.
According to the terms of the agreement, no additional payment will be due from Woodside if the average Brent price is less than or equal to $55 per barrel or if first oil is achieved later than the first half of 2024.
Woodside is the operator and has an 82% participating interest in the Sangomar project, with Petrosen holding the remaining 18%.
The Sangomar Field Development Phase 1 includes a stand-alone FPSO with subsea infrastructure and an expected production capacity of approximately 100,000 barrels/day.