U.S. based oil and gas company Vaalco has entered a sales and purchase agreement to acquire Svenska Petroleum Exploration, including its non-operated interest in the producing deepwater Baobab field offshore Ivory Coast, for the gross amount of $66.5 million.
Vaalco will acquire 100% of the share capital of Svenska with an effective date of October 1, 2023.
Gross consideration for the acquisition is $66.5 million, subject to customary closing adjustments, with the net cash payment to be made by Vaalco on closing expected to be approximately $30 to $40 million depending on a number of factors including the timing of closing.
The acquisition is subject to a number of customary closing conditions, including regulatory and government approvals.
Svenska’s primary license interest is a 27.39% non-operated working interest (30.43% paying interest) in the CI-40 license, which includes the producing Baobab field, located in deepwater offshore Ivory Coast.
The field is operated by Canadian Natural Resources International (CNR), which holds a 57.61% working interest in the project, with the national oil company, Petroci Holding, owning the remaining 15% working interest (10% of which is carried by the other license partners).
The Baobab field is located 30 kilometers off the coast of Ivory Coast in water depths ranging from 900 to 1,300 meters.
Baobab consists of five distinguishable reservoir units in Middle to Late Albian sequences. The field was discovered in March 2001 with the Baobab 1X well and a second well, the Baobab 2X, was drilled in 2002 to appraise the field. Commercial production from the field began in August 2005.
There have been four drilling campaigns at Baobab to date, with the most recent including four production wells and two water injection wells.
All wells are tied back to four subsea manifolds that are connected to an FPSO. Cumulative gross production from the field has been approximately 150 MMBOE, a portion of the estimated over one billion barrels of oil equivalent volumes initially in place.
Current production from the Baobab field is approximately 4,500 WI BOEPD, with 1P WI CPR reserves on October 1, 2023, of 13.0 MMBOE (99% oil), and 2P WI CPR reserves of 21.7 MMBOE (97% oil).
These reserve figures reflect currently sanctioned development activities. However, CI-40 has a significant growth runway with incremental development potential on the Baobab field, as well as the nearby Kossipo field, expected to provide a material uplift to the reserve and production volumes, supporting long-term production of the asset into the late 2030s, according to Vaalco.
Vaalco also revealed the Baobab FPSO is scheduled to be taken offline in early 2025 for planned maintenance and upgrades and is expected to return to production in 2026;
In addition to the CI-40 license in Ivory Coast, Svenska currently owns a 21.05% working interest in the early stage Uge discovery in the OML 145 concession in Nigeria alongside partners ExxonMobil (21.05%), Chevron (21.05%), Oando (21.05%) and NPDC (15.80%) covered by acquisition. There are minimal commitments on this license interest and no drilling or development is currently planned.
“Building a diversified portfolio of high performing assets is a key component of our strategic vision. The Baobab field in Ivory coast has many parallels with Etame in terms of the historic production profile and how the upside is realized through development drilling campaigns meaning this is an asset type that we understand well.
“The field has been significantly de-risked through the drilling of 24 production wells, five injection wells and a near 20-year production history.
“The planned dry-docking and upgrading of the FPSO in 2025 will position us well for the expected production growth from the 2026 drilling program and for future drilling campaigns for many years to come.
“We are partnering with a great operator and believe our significant development experience offshore West Africa and the successful managing of our FPSO changeover in 2022 will provide insight and experience to help enhance future success at Baobab.
“We are adding an asset with strong current production and reserves at a very attractive price and using a portion of our cash on hand to fund the deal. This is highly accretive on key metrics to our shareholder base and provides another strong asset to support future growth,” said George Maxwell, Vaalco’s Chief Executive Officer.