Nexen Petroleum announced on 30 November 2011 that it has farmed out a 20% interest in three deepwater exploration prospects to CNOOC with possibly three others to follow with working interests ranging from 10% to 25%. Two of the prospects, Kakuna and Angel Fire, are located west and northwest of the Knotty Head discovery on Green Canyon Blocks 504 and 327, respectively. The third prospect is Cypress. Earlier this year Statoil farmed into a 27.5% interest in Kakuna.
The transaction reflects continuing pressures on independent producers to seek out partners in North America as well as a spreading NOC strategic effort to broaden their access to future growth asset opportunities.
From Nexen's perspective, this is one of two transactions in which the company has recently farmed down its interest in prospective North American assets. The other was the deal announced with Inpex and JGC in which Nexen has sold a 40% interest in shale gas acreage in British Columbia. In this respect Nexen has joined a long list of independent producers divesting assets for financial reasons and/or because it wanted to reduce its risk exposure.
From CNOOC's perspective, the deal provides limited, but drill-ready exposure in the deepwater Gulf of Mexico. This could be a prelude to further farm in activity, participation in lease sales, or an acquisition to solidify a position in the Gulf of Mexico. It also broadens the company's North American exposure. Late last year and again this year CNOOC entered alliances with Chesapeake in the Eagle Ford and Niobrara plays. The company also acquired Opti which was a partner with Nexen in the Long Lake oil sands project.