Tullow Oil shares soar on Maersk Africa news
Maersk Oil, a unit of shipping conglomerate AP Moller-Maersk, said its planned new investments in exploration in Africa are low cost and should make them relatively resilient to weak oil prices.
The cash-rich Danish company said earlier on Monday it will pay $365 million upfront to buy 25pc stakes in three licences owned by Africa Oil Corporation in Kenya as well as a 25 percent stake in an exploration licence in Ethiopia and a 15 percent stake in another Ethiopian licence.
Shares in Toronto- and Stockholm-listed Africa Oil Corporation soared 33 percent on the news on Monday while shares in Tullow Oil, which operates and controls 50 percent of four of the licences, jumped 15 percent, indicating investors believe Maersk Oil has paid a high price.
Maersk Oil has agreed to pay future contingent payments of up to $480 million to Africa Oil for the Lokichar Project in northern Kenya and southern Ethiopia, depending on the size of the resource after final appraisal and the agreed timetable for the first oil production.
Thomasen said oil has been found in eight areas covered by the licences and production is expected to begin at the start of the next decade.
Maersk Oil was also still looking for opportunities to buy more North Sea interests, he said.
As the oil price has halved since the middle of last year, oil firms have shelved $200 billion worth of spending on new projects since mid-2014, according to oil consultancy Wood Mackenzie.
"(These licences) have potential for oil production with relatively low technical costs and (will be) resilient to low oil prices," Maersk Oil's Chief Executive Jakob Thomasen told Reuters.