Tullow Oil PLC (LSE:TLW) and Kosmos Energy Ltd (LSE:KOS, NYSE:KOS) have signed an agreement in Ghana to extend the offshore oil field out to 2040.
A memorandum of understanding with the Government of Ghana and the joint venture partners envisages the extension to the West Cape Three Points and Deep Water Tano licences, which host Tullow’s Jubilee and TEN oil fields.
It paves the way for up to 20 additional wells in the Jubilee field and would represent fresh investment of up to $2 billion.
Also, the MoU includes commitments to increase gas supply to around 130 million standard cubic feet per day, tied to reductions in the gas price, but guaranteeing gas sale reimbursements.
Tullow chief executive Richard Miller described it as “a valuable step forward”.
“This extension and the fiscal stability of our contracts emphasise the opportunity Ghana represents to deliver additional value through production and reserves additions, providing greater long-term optionality and materiality to these core assets,” Miller said in a statement.
Kosmos chief executive Andy Inglis, meanwhile, added: “This memorandum of understanding recognises the importance of oil and gas in Ghana and the desire of the new administration to create an attractive environment for new investment in the sector.
“Extending the Ghana production licenses is highly accretive, adding material reserves and enabling the partnership to continue investing in the country for the long term.”
Ghana’s Minister for Energy and Green Transition, John Abdulai Jinapor, commented that it “demonstrates a commitment to fostering a stable and attractive investment climate.”
In London, Tullow Oil shares climbed 4.5% to 15.76p whilst Kosmos Energy’s New York quote was up 3.3% at $1.88 per share ahead of Wednesday’s open.