Blog Coverage Cobalt Internationals Oil Block Sale Fails to Receive Government Approval

LONDON, UK / ACCESSWIRE / August 24, 2016 / Active Wall St. blog coverage looks at the headline from Cobalt International Energy, Inc. (NYSE: CIE) as deal to sell of 40% stake in two offshore oil blocks in Angola to state owned enterprise Sonangol Group was terminated on August 23, 2016, as it failed to get necessary approvals from the Angolan government. The deal was valued at $ 1.75 billion. Register with us now for your free membership and blog access at: http://www.activewallst.com/register/.

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Cobalt International Energy is a global oil exploration and production company based in Houston, Texas. It is focused in the deep-water of the US Gulf of Mexico with an emphasis on sub-salt and pre-salt exploration, development, and production. Sonangol (Sociedade Nacional de Combustíveis de Angola, E.P.) is a state owned enterprise with sole concessionaire for exploration of oil and gas and is responsible for the exploration, production, manufacturing, transportation and marketing of hydrocarbons in Angola.

Details of the Agreement

Cobalt International Energy and Sonangol had entered into a Purchase and Sale Agreement for the sale of Angola Blocks 20 and 21 to Sonangol in August 2015. Sonangol currently holds a 30% working interest in Block 20 and a 60% working interest in Block 21. Both parties had agreed that Cobalt International Energy would market 40% working interest in Blocks 20 and 21 to sell the assets to a third party. Sonangol had even made a payment of $250 million to Cobalt International Energy following the signing of the agreement. However, as Cobalt could not get all the necessary approvals from the Angolan government within one year of the deal, the agreement was automatically terminated.

Cobalt International Energy had hinted that the sale of its oil blocks in Angola may not go through on August 2, 2016, when it had announced its results for Q2 2016. In July 2016, Tim Cutt, CEO of International Energy had met up with the executive team and Board of Directors of Sonangol to discuss the status of the sale of these oil blocks.

During the results announcement, Mr. Cutt commented on the deal saying: “Although we would prefer the transaction with Sonangol to close, I am pleased that we can remarket these attractive liquid rich assets to third parties. The development cost environment has improved substantially, the fundamentals for medium to long term liquids pricing remains strong and we have delivered two new discoveries on Block 20.”

Cobalt International Energy is working closely with Sonangol for ironing out any financial and operational implications due to the cancellation of the deal. Cobalt International Energy has already started the marketing and sale process of its Angolan assets.

Impact on Share prices

Cobalt International Energy’s stock had taken a major hit on the news of a possible failure to sell the Angolan oil blocks on August 02, 2016. The company’s shares saw a correction of over 40% following the announcement, but subsequently recovered their losses during recent weeks. The stock was trading at $1.32, up 0.76%, at the close of trading session on August 23, 2016. A total volume of 6.79 million shares changing hands. The company’s stock price is up 33.33% for the past week.

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