The Chief Executive Officer (CEO) of the Ghana National Petroleum Corporation (GNPC), Dr. K. K. Sarpong, has given indication that the bid to acquire additional stakes in two oil blocks operated by Aker Energy and AGM Petroleum will likely be finalised by December.
He explained that more due diligence, in the form of technical, legal, financial and commercial appraisals, would have to be undertaken before a final purchase price for the two blocks is determined.
“We are yet to present the Aker Energy and AGM Petroleum deal to the board. These things take time, and nothing has been firmed up. Possibly by December, we can close the deal,” Dr Sarpong told journalists at a workshop organised by the GNPC at Aburi, in the Eastern Region.
In August this year, Parliament gave GNPC approval to borrow up to US$1.1bn to acquire a 37 percent stake in Deep Water Tano/Cape Three Points (DWT/CTP) block, operated by Aker Energy Ghana, and a 70 percent stake in South Deep Water Tano (SDWT) block, operated by AGM Petroleum Ghana.
Dr Sarpong said the final price of the blocks will be agreed by negotiation, based on the Lambert Energy Advisory valuation.
“Due diligence-driven valuation would determine the actual purchase price to be agreed by the Ministers for Finance and Energy,” he stressed.
The GNPC Boss also indicated that the two blocs have contingent resources of 717 million barrels confirmed with substantial prospects, especially SDWT with about four billion barrels of oil.
Furthermore, estimates indicate that contingent and prospects in both blocs could be 5.117 billion barrels of crude oil.
According to Dr Sarpong, the stakes will be acquired through GNPC’s subsidiary, GNPC Explorco, and the gain to Explorco will be the difference between the resource value and price paid.
He also disclosed that payment for the blocks will be made in three installments: at signing, at approval of plan of development, and at first oil.
On the servicing of the loan to finance the purchase, he explained it will be repaid from the sale of GNPC Explorco’s share of crude oil, together with early repayment from securitisation of crude oil.
Dr Sarpong said the expected benefits of the deal include GNPC getting to build operator capacity at a critical time in history; substantial foreign exchange inflows, estimated at around US$27 billion in nominal terms; and reduction in operational costs through efficient procurement.
He added that the GNPC will also be in charge of local content.
Cost of Aker/AGM acquisition
The GNPC CEO disclosed that the total cost available on acquisition of the Aker/AGM blocs is $1.605.9 billion, comprising $893.8 million as the cost Aker acquired Hess, $445.2 million as total cost Aker incurred since it purchased the bloc up to June 30, 2021 as well as $266.9 million AGM incurred since it purchased the bloc up to June 30, 2021.
Data, he said, also showed that Hess development cost at the time of acquisition by Aker amounted to $1.21 billion, while Aker’s share of this cost was $893.75 million.
Furthermore, post-acquisition cost incurred by Aker and AGM acceptable to GNPC is $712.1 million.
Dr Sarpong noted that GNPC Explorco’s share of this development cost on acquisition will amount to $1.224.3 billion.
This, he said, will comprise share of Hess cost ($661.4 million), share of post Hess acquisition by Aker ($ 329.4 million) and share of AGM cost ($223.5 million).
He reminded Ghanaians that with the acquisition, the amount of $1.22 billion to be recovered by GNPC Explorco will remain in Ghana.
Dr Sarpong disclosed that Aker has substantial deep water experience and technology to allay fears regarding the death of one of the blocs.
According to him, GNPC Explorco would be able to use deep water technology to develop targeted fields and other fields in the Ghanaian basin, since most of Ghana’s oil is in deep waters.
GNPC’s capacity
Dr Sarpong explained that the intended acquisition by GNPC Explorco into Aker and AGM, offers an opportunity for Corporation to acquire operatorship capacity to enable it to play a major role as an exploration and production company.
He added that the partnership will enable GNPC and Ghana to face the emerging energy transition in a well-prepared manner as well as create significant value for Ghana.
