The firms have agreed to acquire 100% interest in Harvest Dussafu BV, a wholly-owned subsidiary of Harvest Natural Resource Inc., including its 66.667% interest in the Dussafu PSC, for $32 million.
Acquiring the interest on behalf of the BW firms is BW Energy Gabon Pte. (BWEG), a wholly-owned subsidiary of BW Energy Holdings Pte. (BWEH), which was formed by BW Offshore and BW Group to pursue oil and gas interests. The joint venture is owned 66.67% by BW Offshore and 33.33% by Maple Company Ltd., a wholly owned subsidiary of BW Group.
The remaining 33.333% interest in the Dussafu block is owned by Pan-Petroleum Gabon BV (PPGBV), a subsidiary of Panoro Energy ASA. BWEG also has entered into a memorandum of understanding with PPGBV relating to the proposed acquisition of an additional 25% interest in the Dussafu block for $12 million in cash subject to the closing of the Harvest deal. BWEH also is in discussions with the Gabon Oil Co. (GOC) for their participation.
BW Offshore notes the drop in oil prices over the past couple of years has reduced the costs of drilling and subsea equipment, which in turn has lowered the breakeven price required for a Dussafu development. Following Gabonese license requirements, the start of oil production is planned for 2018.
"The availability of production assets that match field requirements derisks the development and makes it realistic to achieve first oil within 2018,” said Carl K. Arnet, BW Offshore chief executive officer. “The project economics are robust at and below the current oil price."
BWEH plans to finance the acquisitions from Harvest Energia BV and PPGBV through use of internal funds. In addition to the acquisition price payable for the interests, the field development is estimated to cost a total of $150 million until production startup.