Norwegian oil firm Equinor has exercised its preferential rights to buy Shell’s 22.45% interest in the Caesar Tonga oil field in the U.S. Gulf of Mexico for $965 million.
The announcement comes a month after Israel’s Delek reached a deal to buy’s Shell’s stake for the same amount, but the transaction was subject to Caesar Tonga partners not exercising preferential rights.
The acquisition will lift Equinor’s interest from 23.55% to 46.00%. Anadarko remains the operator with a 33.75% interest, and Chevron retains its 20.25% interest.
The Caesar Tonga field is located 180 miles (290 kilometers) south-southwest of New Orleans in the Green Canyon area and is one of the largest deepwater resources in the US Gulf of Mexico. Equinor’s current share of production from Caesar Tonga is 18,600 boepd (net to Equinor).
“We are pleased to increase our presence in the US, one of our core areas. This is an asset we understand well, and our larger interest will deliver significant additional free cash flow from day one”, says Christopher Golden, Equinor’s senior vice president for Development and Production International, North America Offshore.
Golder said: “Deepwater Gulf of Mexico forms an important part of Equinor’s portfolio. This deal will strengthen our position in this prolific basin and build on the recent discovery in the Blacktip well. Later this year we will be drilling the Equinor-operated Monument prospect, which has the potential to further develop our position in the Gulf of Mexico,” adds Golden.
The transaction will have an effective date of 1 January 2019. The closing of the sale will be subject to customary consents and approvals.
As previously reported, Israel’s Delek Group had in April agreed to buy Shell’s 22.45% stake in the Caesar-Tonga field. The stake was to be sold to Delek CT Investment LLC, a subsidiary of Delek Group Ltd (Delek) for $965 million in cash.
The agreement was subject to the right of first refusal held by the three other co-owners in the field, meaning that Equinor’s Monday announcement will make Delek’s agreement with Shell void.
First oil from the Caesar-Tonga field was produced in March 2012. Anadarko completed its eighth development well at the field in the second quarter of 2018. The well was tied back to the Constitution Spar and came online in the third quarter of 2018. Total average production at Caesar-Tonga is over 70,000 boe/d.