ConocoPhillips' (NYSE: COP) plan to sell its stake in an oil find off Senegal to Woodside Petroleum Ltd. hit a speed-bump on Aug. 23 as a junior partner attempted to buy time to pre-empt the deal at the same time it announced an increase in the size of the field.
ConocoPhillips agreed in July to sell its 35% stake in the deepwater SNE Field offshore Senegal to Woodside for up to US$430 million. At the time, the SNE Field was estimated to hold 561 million barrels of oil.
On Aug. 23, Australian explorer, FAR Ltd., ConocoPhillips' partner in the field, said Conoco failed to comply with the terms of their joint operating agreement as it relates to the proposed sale of its stake, and as a result, the clock had yet to start for it to exercise its pre-emption rights.
RELATED: Woodside To Buy ConocoPhillips' Senegal Assets For $350 Million
"FAR has advised ConocoPhillips of this and both parties have been urged by the Government of Senegal to reach an amicable solution on this matter," it said.
FAR, which owns a 15% stake in the SNE Field, declined to comment further on its intentions. ConocoPhillips was not immediately available for comment.
FAR also released a statement that increased the estimate of so-called 2C contingent oil resources for SNE to 641 million barrels and estimated the field covered more than 350 sq km (135 sq miles), based on recent appraisal well drilling at the field.
"SNE is a world class oil field that is truly worthy of the 'elephant' title," FAR Managing Director Cath Norman said in a statement.
An analyst said the announcement on the resource increase and the effort to re-set the clock on exercising its pre-emptive rights suggested that FAR, valued at A$348 million (US$266 million), was still trying to line up funding to buy ConocoPhillips' stake.
The analyst declined to be named as he is unauthorized to speak to the media.
Woodside declined to comment, but said last week it was just awaiting approval from the government of Senegal and did not see any obstacles to the deal, due to be completed by December.
Woodside CEO Peter Coleman said Senegal would be an important addition for the company as it looks to boost oil reserves and sees the field coming into production sooner than some of its other prospects.
The SNE joint venture's operator and 40% stakeholder, Britain's Cairn Energy Plc, has said the field could start producing by 2020. (US$1 = 1.3079 Australian dollars)
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