BP Said to Study Bid for Jubilee Stake

Source: Bloomberg 10/22/2009, Location: Africa

BP Plc, Europe’s second-biggest oil company, may bid for Kosmos Energy LLC’s stake in the Jubilee field off Ghana’s coast and has hired Goldman Sachs Group Inc. to advise it, two people familiar with the matter said. BP has held talks with Ghana National Petroleum Corp. about a potential joint offer for Kosmos’s Ghanaian assets, though no decision has been made, the people said, asking not to be identified because the discussions are confidential.

Competition from London-based BP could threaten Exxon Mobil Corp.’s plan to purchase Kosmos’s stake in the Jubilee field for at least $4 billion, one of the people said. Closely held Kosmos, backed by Blackstone Group LP and Warburg Pincus LLC, said Oct. 12 that it agreed to sell its Ghana assets to Exxon, including its 23.49 percent stake in Jubilee.

This “puts BP head-to-head with Exxon,” said Peter Hutton, a London-based analyst at NCB Stockbrokers Ltd. “It’s an open competition.”

Goldman Sachs previously advised Cnooc Ltd., China’s biggest offshore oil producer, on a potential bid for Kosmos’s stake, one of the people said. It was unclear whether Hong Kong- listed Cnooc or its parent, China National Offshore Oil Corp., would bid with Ghana. New York-based Goldman stopped working for Cnooc before being hired by BP, the person said.

Cnooc Approach ‘Dead’
“If Goldman Sachs are working for BP they can’t work for Cnooc; that implies that that approach is dead,” Hutton said by telephone from London. “It makes sense for BP perhaps more than for others. If it’s confirmed, it moves up a gear in the M&A process for West Africa offshore.”

David Nicholas, a spokesman for BP, declined to comment, as did spokespeople for Goldman Sachs and Cnooc. Blackstone spokeswoman Christine Anderson and Patrick McGinn, a spokesman for Exxon Mobil, also declined to comment. Officials at Kosmos couldn’t immediately be reached.

BP may be hampered in its efforts to bid for the Ghana assets because Irving, Texas-based Exxon, the world’s largest energy company, already has a binding agreement to buy them from Kosmos. The deal is exclusive, Kosmos Chief Financial Officer Greg Dunlevy said on Oct. 12 in an e-mail.

“Exxon has the advantage over BP because it is better known in that part of West Africa due to its extensive operations in Nigeria,” said Wumi Iledare, a professor of petroleum economics at Louisiana State University in Baton Rouge who formerly worked for Royal Dutch Shell Plc. “But it remains to be seen whether BP will benefit from the British colonial legacy in Ghana.”

Shares Jump
The stock of shareholders in Jubilee rose. Tullow Oil Plc, the operator of the field, climbed 0.9 percent to 1,264 pence in London, the highest close since starting to trade in May 1989. Anadarko Petroleum Corp., with a 23.49 percent stake, advanced as much as 1.8 percent in New York before reversing gains. It traded down 0.9 percent at $65.62 as of 1:10 p.m. local time.

Ghana is set to become one of Africa’s newest oil exporters in late 2010 when production begins at Jubilee. The field was discovered in June 2007 and may hold as many as 1.8 billion barrels, according to Tullow, which holds a 34.7 percent stake.

The West African nation is attracting “many companies” interested in oil exploration as Jubilee prepares to start output, Thomas Manu, director of exploration and production at Ghana National Petroleum, said yesterday. He declined to comment on whether the company had been contacted by BP.

Manu said Oct. 13 that GNPC was “still in discussions” with Kosmos about acquiring its Ghana assets, including a stake in Jubilee, and would consider proposals from other companies to join as partners.

West Africa Exploration
Tullow is exploring an area that runs from Ghana to Sierra Leone. That area may hold some 6 billion barrels of undiscovered oil, the London-based company said Sept. 16.

“You start to get a little bit of premium leaking into assets in the West African Atlantic Margin,” according to NCB Stockbrokers’ Hutton. “It’s going to have a positive read across for others.”

StatoilHydro ASA, the Norwegian oil and gas producer that has operations in Nigeria and Angola, has “no plans for activity in Ghana now,” Mari Dotterud, a company spokeswoman, said in a phone text message.

Partners in Jubilee, aside from Kosmos, Tullow and Anadarko, include Sabre Oil & Gas with a 2.81 percent holding, EO Group with 1.75 percent and GNPC with 13.75 percent, Tullow said in a July 15 statement.


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