Company says new African licences relatively resilient to low oil price

November 9, 2015 1:31 PM

Thomasen said oil has been found in eight areas covered by the licences and production is expected to begin at the start of the next decade.

Crew members look out from the world's largest container ship, the MV Maersk Mc-Kinney Moller, as it berths during its maiden port of call at a PSA International port terminal in Singapore September 27, 2013. REUTERS/Edgar Su

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 Monday it will pay $365 million upfront to buy 25 percent stakes in three licences owned by Africa Oil Corporation in Kenya as well as a 25 percent stake in an exploration licence in Ethiopia and a 15 percent stake in another Ethiopian licence.

"(These licences) 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 Corporation soared 33 percent on the news on Monday while shares in Tullow Oil, which operates and controls 50 percent of four of the licences, jumped 15 percent, indicating investors believe Maersk Oil has paid a high price.

Maersk Oil has agreed to pay future contingent payments of up to $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.

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 $200 billion worth of spending on new projects since mid-2014, according to oil consultancy Wood Mackenzie.