BP To Acquire Cairn Energy's Oil Assets Offshore Senegal

Per Reuters, BP plc (NYSE:BP) is planning to acquire a stake in Cairn Energy’s oil assets, located offshore Senegal.

Subject to approval by the state, BP intends to buy 30% interest in Cairn Energy’s deepwater SNE field. This acquisition is likely to be valued at $600 million.

However, the companies have declined to disclose details.

The waters off Senegal, along with neighbors Mauritania and Gambia, have been consistently pursued by oil majors. The region is believed to hold a large reserve of oil.

This transaction is expected to enhance BP’s position in Senegal. In December 2016, the company formed a joint venture with Kosmos Energy and discovered a huge gas deposit in May 2017. BP has two more offshore field investments in the region.

It is to be noted that over the next ten years, Senegal and Mauritania are likely to be two important areas in BP’s portfolio. The company intends to make huge investments in the Tortue LNG project, which is anticipated to yield first gas in 2021.

The deepwater SNE project represents the first oil development in the West African nation. Other partners in the project along with Cairn Energy include Australia’s biggest independent oil and gas producers — Woodside and FAR Ltd. The companies expect the project to be commissioned by 2021.

In 2016, Woodside acquired a 35% stake from ConocoPhillips (NYSE:COP) for about $430 million, or $2.20 a barrel based on reserves of 561 million barrels in SNE field. Later, the reserves were upgraded to about 650 million barrels.

Other oil giants who have been participating in the waters of the West African coast are Total SA (NYSE:TOT) and CNOOC Ltd (NYSE:CEO) , based in China.

Price Performance

The company’s shares have returned 5.6% compared with the industry’s rally of 4.8% in the past six months.

Zacks Rank & Key Picks

BP currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank stocks here.

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