Equinor has exercised its preferential rights to acquire an additional 22.45 per cent interest in the Caesar Tonga oilfield from Shell for US$965 million in cash.
The deal will increase Equinor’s interest from 23.55 per cent to 46 per cent. Anadarko remains the operator with a 33.75 per cent interest, and Chevron retains its 20.25 per cent interest.
The Caesar Tonga field is located 290 kilometres south-southwest of New Orleans in the Green Canyon area and is one of the largest deepwater resources in the US Gulf of Mexico.
The deal will have an effective date of 1 January 2019. The closing of the deal will be subject to customary consents and approvals.
“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”, said Christopher Golden, Equinor’s senior vice president for Development and Production International, North America Offshore.
Shell had previously agreed to sell the Caesar-Tonga assets to Delek Group, also for US$965 million. That deal was conditional upon other interest-holders agreeing not to buy the stake.
Michael Murphy, research analyst with Wood Mackenzie's Gulf of Mexico team, said: "This provides Equinor with a great opportunity to increase working interest in an asset it already knows well. The move increases Equinor's US Gulf of Mexico 2019 net forecasted production by almost 15 per cent, to over 100,000 barrels of oil equivalent per day. The project will add near term cash flow to Equinor's regional portfolio, and with operator Anadarko set to be acquired by Occidental, it could also position the company to seek operatorship of the subsea tie-back field in the future."