Cheiron Petroleum Corporation, Egypt’s one of the leading independent exploration and production company, has agreed to purchase 50% of Shell’s upstream oil and gas interests in the Western Desert
The remaining 50% of the interests will be purchased by Cheiron’s strategic partner, Cairn Energy plc, a new entrant into the Egyptian upstream sector.
Cheiron will operate the production and development concessions in the asset portfolio, using the experience gained over three decades of improving safety, production, reserves and cost management performance in its Egyptian fields. These are located onshore in the Western Desert and Nile Delta, and offshore in the Gulf of Suez and Mediterranean Sea. Cairn, a UK listed company with significant international experience and exploration expertise, will operate three of the exploration licenses. The field activities will continue to be managed by the Bapetco Joint Operating Company.
The consideration to be paid for the interests is approximately US$323mn with additional contingent payments of up to US$140mn depending on oil price and exploration success. The consideration will be subject to customary working capital adjustments for the period between the effective date of the transaction (1 January 2020) and the completion date.
The acquisition will add Proven plus Probable reserves of 113 mmboe and production of approximately 40 kboepd (as at 31 December 2020) to the Cheiron business on a working interest basis.
Funding for the acquisition will be provided by a strong syndicate of nine International European, Middle Eastern and African Banks and Lenders, and advisory support has been provided to the partnership by Rothschild & Co and Gaffney Cline & Associates.
“Cheiron is a committed investor in Egypt and believes in the long term strength of the country’s energy sector, reflecting the Government’s sustained efforts to create an attractive business climate and bring new, high quality investors into the country,” commented David Thomas, CEO of Cheiron.
The asset sale is subject to Government and Partner approvals and is expected to complete in the second half of 2021.
