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Genel Energy PLC

Genel Energy snaps up rare opportunity offshore Angola

Genel chief Tony Hayward says the deal is a rare opportunity to enter into a low risk, multi-billion barrel resource play.

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Genel Energy (LON:GENL) has made a move into a pre-salt exploration play, offshore Angola, which it describes as having “multi-billion barrel prospectivity”.

It is also a relatively low risk and near term opportunity, the company says, as six discoveries have already been made in the adjacent area.

These discoveries are also considered to analogous to Brazil’s pre-salt discoveries, in the Santos and Campos basins, on the other side of the Atlantic.

A well scheduled to be drilled in the second quarter of this year, targeting what Genel calls the “very material” Dilolo prospects. And a second well will follow straight after.

Genel is teaming up with White Rose Energy Ventures, which is backed by the Riverstone Holdings private equity group, with the pair jointly buying a 15% stake in Blocks 38 and 39, in the Kwanza Basin.

Together they will pay China Sonangol US$59mln upfront for 15% of Block 38.

To acquire the 15% stake in Block 39, where Dilolo is located, the partners will pay Statoil a total of US$222mln, comprising a pro-rata share of past costs and a partial carry of the Norwegian firm’s share of the first well’s cost.

Genel's share of the acquisition costs, about US$141mln, will be paid from existing cash balances.

Chief executive Tony Hayward said:  "This transaction provides a rare opportunity to enter into a low risk, multi-billion barrel resource play.

“It fits with our stated strategy of securing high quality exploration opportunities targeting very material resources, and further enhances the opportunity to add significant shareholder value through the drill bit in Africa. 

“Partnering with White Rose offers us a unique opportunity to secure a material interest in the exciting pre-salt play whilst managing our financial exposure to a level appropriate for a company of our size.”

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