Maersk joins African oil explorers

COPENHAGEN, Denmark, Nov. 9 (UPI) -- Despite reporting weak results in the third quarter, Maersk Oil said it was taking a long view with new investments in onshore acreage in Kenya and Ethiopia.

In a deal with Africa Oil Corp., the Danish company said it acquired half the shares in three onshore exploration licenses in Kenya and two in Ethiopia.

"This investment adds to an already attractive non-operated onshore portfolio for Maersk Oil that includes our 25-year presence in Algeria," Maersk Oil Chief Executive Officer Jakob Thomasen said in a statement. "This is an important driver of long-term value."

Maersk pays about $365 million upfront in part to cover exploration costs for Africa Oil and contingent $405 million in potential development costs for acreage covering northern Kenya and Ethiopia.

For Africa Oil, bringing the Danish company into the eastern African basins helps add significant development expertise to emerging prospects.

"This transaction allows Africa Oil to keep a significant stake in the project with no additional equity financing expected prior to first oil [development]," CEO Keith Hill said in a statement.

Africa Oil, which has headquarters in Canada, has teamed up with Tullow, based in London, in the discovery of more than 600 million barrels of oil. Africa Oil said Maersk is joining developers following at least eight discoveries in the area.

Few commercial developments have been reported in the region and low oil prices may inhibit substantial investments, a market scenario that's encouraged multi-party development deals.

"We are rebuilding the exploration business with new acreage positions and pre-development discoveries to balance the risk profile in our portfolio," Thomasen said. "This agreement with Africa Oil is an example of this."

Maersk Oil last week said it made a profit of $32 million for the third quarter of 2015, against a $222 million profit reported one year ago.