DNO enters Cote d'Ivoire in $117mn deal with RAK
DNO ASA, the Norwegian upstream oil and gas operator focused on Kurdistan, has secured an cash-and-stock deal to enter West African gas, buying up RAK Petroleum's stake in Cote d'Ivoire offshore Block CI-27, home to the country's largest gas reserves.
DNO will take a 33% indirect stake in Foxtrot International, the holding company for the Côte d'Ivoire assets, held via an operating company called Mondoil Enterprises. As a result, DNO will hold 9.09% indirect working interest in Block CI-27 and 8% of the shares in a second, exploration-stage licence offshore Cote d'Ivoire, in Block CI-12.
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DNO and RAK Petroleum agreed a total consideration of $117.3mn, comprising a $95mn valuation for the Cote d'Ivoire assets plus $22.3mn in additional cash and working capital costs. The share payout will involve 78.943mn DNO shares each priced at around 14.38 krone ($1.92), with the transfer to be sanctioned at a DNO extraordinary meeting on September 13.
RAK Petroleum will hold its own EGM to approve the "capital repayment" section of the acquisition agreement. DNO shares paid under the deal must be distributed to RAK shareholders by October 2022.
DNO said it also holds 5.1% equity in RAK Petroleum, which will result in it receiving 26mn of "own shares" through the acquisition agreement, which it will retain as treasury shares.
Bjorn Dale, managing director of DNO, said the company had further West African investment opportunities on its radar. He added: "As DNO targets expansion beyond the Kurdistan region of Iraq and the North Sea, the move into Côte d'Ivoire is an important first step into a highly prospective region offering a broad set of growth opportunities through acquisition of producing fields, development assets and exploration licenses."
Block CI-27 contains the Foxtrot gas field, which has been extracting hydrocarbons since 1999. It is one of four offshore oil, gas and condensate deposits in the cluster, together capable of meeting 75% of Cote d'Ivoire's gas consumption needs.
As well as Foxtrot, Block CI-27 contains the 2012 gas development Mahi and the $1bn Manta gas field, which achieved first gas in 2016. It also hosts Marlin oil and gas field.
The four oil and gas fields are tied back to two fixed production platforms. Around 200mn ft3/d of gas was sold from Block CI-27 in gross average terms during the first half of 2022, in addition to 1,500 barrels/day of liquids. Of this, around 140mn ft3/d is sold to local power stations at a current price point of $6.47/MMBtu, under a take-or-pay gas sale and purchase signed in 1999.
Foxtrot International operates the licence with a 24% shareholding, followed by project partners Petroci (40%), Seci (24%) and Suez Group's Enerci (12%). These figures were correct as of March 2020.
In 2020, the project partners extended Block CI-27's production sharing contract and gas sales agreement out to 2034. Subsequently, the consortium has embarked on a $350mn field development spend that will see gas output increase to above 230mn ft3/d, subject to electricity sector demand and well performance.
Two new gas-fired power stations in Cote d'Ivoire will benefit from the initiative, via new onshore transmission facilities.
The expansion programme contemplates a total of five new production and sidetrack wells. DNO says five of these have been completed and that work on delivering the final side-track well has been started.