ExxonMobil has agreed to acquire a large stake in Ghana’s Jubilee oil field from its private equity owners, paying about $4 billion for one of Africa’s most potentially lucrative oil discoveries in recent years.

The deal was first mooted at the end of last year and attracted interest from many of the world’s big oil groups, but became bogged down by horse-trading with Ghana’s government.

It would generate about a four-times return for Blackstone and Warburg Pincus, which together invested $800 million in Kosmos Energy, owner of the Jubilee stake.

Analysts have been expecting ExxonMobil, with its large cash position, to make acquisitions since the economic and credit crisis began. However, the world’s biggest oil company has said it was waiting for prices to stabilize.

The purchase of Jubilee, therefore, signals the market has reached a point where successful negotiations would be more likely, as sellers come to terms with the lower values being attached to assets.

It also underscores a growing interest in west Africa by the oil majors, which have been limited in their ability to expand by rising resource nationalism in places such as Russia and Venezuela. Africa has seemed a better bet, where military instability is the big risk.

However, offshore positions such as Jubilee are increasingly sought after, as they are more difficult targets for local insurrections.

The Jubilee field, discovered in 2007 off the coast of Ghana, is divided into two licence areas. Kosmos has a stake of almost 31% in one, and 18% in the other.

Dallas-based Kosmos was founded by Jim Musselman and Brian Maxted, two former executives of Triton Energy, which discovered the Ceiba Field in Equatorial Guinea before being sold for $3.2 billion to Amerada Hess in 2001.

Large western companies including Royal Dutch Shell and BP, and emerging market companies, such as CNOOC of China, had been listed as possible bidders.

Kosmos wrote to all bidders on Monday night telling them the sale process had been terminated after it reached an “exclusive binding agreement” with ExxonMobil.

However, Ghana has worried that its interests were not being adequately respected in the sale process, which is being run by Standard Chartered and Barclays Capital.

The recently elected government felt it was not being kept sufficiently well-informed about the negotiations. The country has no experience of managing oil reserves.

Ghana National Petroleum Corporation (GNPC), the state oil group, this summer hired Morgan Stanley, the investment bank, to advise on how to develop its resources most effectively.

A person familiar with the deal said Exxon was the ideal investor in the Jubilee field for Ghana, as it had the necessary resources and expertise to develop its deep-water fields.

Blackstone and Warburg Pincus, two of the world’s biggest private equity groups, invested $300 million in Kosmos in 2004 and a further $500 million in 2008. The return they stand to make on the deal could be politically sensitive in Ghana.

Read more about Oil and Gas in Ghana

Ghana National Petroleum Corporation (GNPC) | Kosmos Energy | ExxonMobil | Blackstone Group | Warburg Pincus

Source(s): Financial Times