Isabel’s First Order Of Business At Sonangol Is To Pull Out Of $1.8B Cobalt Deal

Written by Kevin Mwanza

Isabel dos Santos, the billionaire daughter of Angola’s authoritarian president and the newly appointed Sonangol boss, has cancelled a $1.8 billion deal to buyout US-based Cobalt International Energy stake in two local oil blocks.

Isabel’s decision to pull Sonangol out of the deal reached last year, delays what the US group had hoped would be the final act of its eventful foray in one of Africa’s largest oil producing nations, Financial Times reported.

This would be her first major decision since the Africa richest woman – worth over $3 billion according to Forbes — was controversially appointed by her father to head the state energy group in early June.

A year ago, Sonangol had agreed to buy 40 percent of Cobalt’s operating interest in blocks 21/09 and 20/11.

Cobalt CEO Tim Cutt – who was appointed just a month ago from BHP Billiton – said in a Aug. 2 statement that he had met with Isabel and her team in late July to discuss the status of the sale but was asked to seek an investors elsewhere.

“At this meeting, Cobalt and Sonangol jointly agreed that Cobalt would market Cobalt’s 40 percent working interest in Blocks 20 and 21 to sell the assets to a third party,” Cobalt’s statement said.

“On August 1, Cobalt received a letter from Chairwoman Isabel dos Santos confirming Sonangol’s support of such marketing and sale process. Cobalt is currently preparing a data room for its Angola assets and will immediately commence the marketing and sale process.”

Sonangols pull out comes amid an ongoing US corruption investigation into Cobalt’s dealings in Angola.

In 2012, seven years after it was founded with $500 million from Goldman Sachs and US private equity groups, Cobalt’s share price jumped 38 percent in a day, giving it a market value of $11 billion, after it struck oil under Angola’s seabed.

It later emerged that three top Angolan officials had held previously concealed stakes in a local company, Nazaki Oil and Gaz, which the government had assigned to be Cobalt’s partner when granting exploration rights, Financial Times reported.

US authorities have since had a long standing investigation into the matter although both Cobalt and its Angolan partners deny any wrong doing.

Cobalt shares plunged as much as 43.5 percent after it announced it was unlikely to close the $1.8 billion sale of its stake in the two oil blocks to Sonangol, Reuters reported.

“Although we prefer the same transaction with Sonangol to close, I am pleased that we can remarket these…assets to third parties,” Cutt said in a post-earnings call on Tuesday.