Kosmos Energy (NYSE: KOS) has announced that it has entered into a farm-out agreement with Hess Suriname Exploration Limited, a wholly-owned subsidiary of the Hess Corporation (NYSE: HES), covering the Block 42 contract area offshore Suriname.
Under the terms of the agreement, Hess will acquire a one-third non-operated interest in the Block 42 contract area from both Chevron Corporation (NYSE: CVX) and Kosmos.
As part of the agreement, Hess will fully fund the cost of a 6,500 square kilometer 3D seismic survey, subject to an agreed maximum limit, inclusive of Hess’ share, expected to commence in the third-quarter of 2016.
Additionally, Hess will disproportionately fund a portion of the first exploration well in the Block 42 area, subject to an agreed maximum limit, inclusive of Hess’ share, contingent upon the partnership entering the next phase of the exploration period. The agreement is subject to certain customary closing conditions.
Andrew G. Inglis, chairman and chief executive officer, said: “Given recent industry success in the basin, Suriname is a top ranked opportunity in our exploration portfolio. This agreement with Hess, executed in an industry environment of capital constraints, validates the quality of our acreage position and the ongoing work to mature a number of significant prospects toward drilling. The terms of the agreement are consistent with our business strategy of retaining operatorship through exploration and collaborating with industry-leading partners who bring technical and regional expertise, as well as strong financial capabilities.”
Upon closing of the transaction, the interests in the Block 42 contract area will be as follows: Kosmos, 33.33% (Operator); Chevron, 33.33%; and Hess, 33.33%.
Kosmos has held rights to conduct exploration in the Block 42 and Block 45 contract areas since 2011 under production sharing contracts with the Government of Suriname. The blocks are contiguous and cover more than 11,000 square kilometers.
Kosmos is a leading independent oil and gas exploration and production company focused on frontier and emerging areas along the Atlantic Margin. Its assets include existing production and development projects offshore Ghana, large discoveries offshore Mauritania and Senegal, as well as exploration licences with significant hydrocarbon potential offshore Portugal, Sao Tome and Principe, Suriname, Morocco and Western Sahara.
Kosmos is listed on the New York Stock Exchange and is traded under the ticker symbol KOS.