ExxonMobil acquires 25% in Mozambique Area 4 from Eni for US$2.8 billion
Eni is to sell half of its 50% indirect interest in Area 4 offshore Mozambique to ExxonMobil, for US$2.8 bn. The Area 4 block contains deep-water gas resources of c.65 tcf (WM commercial + technical). The block will be developed through the Coral FLNG and Area 4 onshore LNG projects. ExxonMobil will operate the proposed two-train onshore LNG project while Eni will continue to operate Coral FLNG and the upstream development. The price equates to US$0.17/mcf, based on our resource volumes. This is a significant discount to earlier entries into Mozambique LNG, but is not unexpected given the change in commodity markets since those deals were announced. Our base case valuation (Coral FLNG and two onshore LNG trains) is lower than the price paid and it seems clear ExxonMobil has expansion in mind. There is certainly enough gas to expand the onshore project to 6 x 5 mmtpa trains; this would bring our valuation more in-line with the transaction price.