Kosmos Energy Ltd and Tullow Oil PLC on Wednesday reported the extension of their exploration prospects in Ghana until 2040.
Kosmos, a Dallas, Texas-based oil and gas producer focused on deepwater exploration, operates offshore assets in Ghana alongside London-based peer Tullow Oil.
The firms said they have entered into a memorandum of understanding with local venture partners, namely the Ghanian government, South African state miner PetroSA, Ghana National Petroleum Corp and its exploration branch Explorco.
The MoU allows Kosmos and Tullow to extend their licenses for the West Cape Three Points and Deep Water Tano area, which covers the Jubilee and TEN fields on Ghana’s west coast.
Additionally, Kosmos and Tullow have approval to drill up to 20 new wells at Jubilee, representing a USD2 billion investment over the duration of the permit, and the expectation of “a material increase” in probable fuel reserves.
The firms plan to increase the supply of gas from the Jubilee and TEN fields to about 130 million standard cubic feet per day. Additionally, they have set their sets on a price reduction for Jubilee-derived gas and “a guaranteed reimbursement mechanism for gas sales”.
Tullow and Kosmos also said they will invest in the Ghana National Petroleum Corp, focusing on the use of technology to improve capacity.
Following Wednesday’s MoU, the venture partners must submit and secure approval for an addendum to their Jubilee field development plan. They must also enter new gas sales agreements, and submit the payment security mechanism and license extensions for parliamentary approval before the third-quarter- end on September 30.
“This extension and the fiscal stability of our contracts emphasises the opportunity Ghana represents to deliver additional value through production and reserves additions, providing greater long-term optionality and materiality to these core assets,” commented Tullow’s Chief Executive Richard Miller.
Andy Inglis, chief executive of Kosmos, added: “This investment is expected to maximise the value of the fields for the benefit of the country’s economic development and Kosmos’s shareholders. We look forward to working with President Mahama and his government to invest in and advance Ghana’s energy sector.”
This comes after Kosmos backed down from a bid to acquire Tullow Oil, back in December.
Tullow shares were up 3.9% at 15.66p on Wednesday morning in London, while shares in Kosmos rose 3.2% to 128.00p.
