ONGC gains as ONGC Videsh to acquire stake in Senegal's oil field

ONGC rose 1.27% to Rs 71.60 after the company said ONGC Videsh will acquire 13.6667% participating interest in exploitation area and 15% participating interest in exploration area under RSSD production sharing contract, offshore Senegal.

ONGC Videsh through its wholly owned subsidiary has signed definitive binding agreements with FAR Senegal RSSD SA (Seller), a wholly owned subsidiary of FAR, on 10 November 2020 for acquiring 13.6667% participating interest in exploitation area (Sangomar Field) and 15% participating interest in remaining contract area (exploration area) of Rufisque, Sangomar Offshore and Sangomar Deep Offshore (RSSD) Block, Offshore Senegal.

The acquisition involves an upfront consideration of $45 million with customary adjustments including the opening working capital as of 1 January 2020 and the cash calls paid or to be paid from January 2020 onwards until completion (excluding any default interest paid/payable by FAR for any delay in cash call payments). This shall be payable upon completion. The acquisition also involves contingent payments payable annually (capped at $55 million) depending upon the brent oil price from First Oil until the earlier of 3 years from First Oil or 31 December 2027. Total investment involved including the development cost until the first oil is expected to be around $600 million.

Woodside Energy (Senegal) BV (Woodside), Capricorn Senegal (Cairns) and Le Socides Proles du Sal (Petrosen-the national oil company of Senegal) are other partners in the RSSD block. Post completion of acquisition of Cairns stake by Woodside, Woodside shall hold 68.3333% participating interest in Sangomar Field and 75% participating interest in Exploration Area while Petrosen shall hold 18% participating interest in Sangomar Field and 10% participating Interest in Exploration Area of the RSSD Block.

Senegal, officially the Republic of Senegal, is a country in West Africa. The Sangomar Field, currently under development, is located in the deep waters of Mauritania, Senegal, Gambia, Guinea-Bissau and Guinea-ConakryBasin (MSGBC Basin), Offshore Senegal, covering an area of 772 sq. kms. and is planned to go on production in 2023 underPhase-1 development.

"The completion of the present transaction would mark ONGC Videsh entry in Senegalese offshore in a significant project under development and is consistent with its strategic objective of adding high impact exploration and near-term production assets to its existing E&P portfolio," ONGC said in a statement.

ONGC Videsh is a wholly owned subsidiary of ONGC. At present, ONGC Videsh has participation in 37 projects in 17 countries across the globe. ONGC is 60.41% owned by the Government of India (as on 30 September 2020).

ONGC's consolidated net profit slumped 84.7% to Rs 1,090.03 crore on 42.9% drop in net sales to Rs 62,496.06 crore in Q1 June 2020 over Q1 June 2019. The company will announce its Q2 September 2020 result on 13 November 2020.

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