Maersk Oil, a unit of shipping conglomerate A.P. 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 Nov. 9 it will pay US$365 million upfront to buy 25% stakes in three licenses owned by Africa Oil Corp. in Kenya as well as a 25% stake in an exploration license in Ethiopia and a 15% stake in another Ethiopian license.
"[These licenses] 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.
Shares in Toronto- and Stockholm-listed Africa Oil soared 33% on the news on Nov. 9 while shares in Tullow Oil Plc, which operates and controls 50% of four of the licenses, jumped 15%, indicating investors believe Maersk Oil has paid a high price.
Maersk Oil has agreed to pay future contingent payments of up to US$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 licenses 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 US$200 billion worth of spending on new projects since mid-2014, according to oil consultancy Wood Mackenzie.
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