On Wednesday, Kosmos Energy Ltd. (NYSE:KOS), along with the Government of Ghana, Tullow Oil plc, PetroSA, the Ghana National Petroleum Company (GNPC), and Explorco inked a Memorandum of Understanding (MOU).

The deal extends the West Cape Three Points (WCTP) and Deep Water Tano (DWT) licenses, covering the Jubilee and TEN oil fields, through 2040.

The agreement includes authorization to drill up to 20 new wells in the Jubilee field, representing a potential investment of up to $2 billion throughout the extended licenses.

Also Read: Exxon Stock Vs. Chevron: The 11 Billion Barrel Oil War That Could Shake Up Energy ETFs

This extension is expected to boost gross 2P reserves for the joint venture partners significantly.

The next steps include submitting an addendum to the Jubilee Plan of Development (PoD) for approval, finalizing new fully-termed gas sales agreements (GSAs), and seeking parliamentary approval for both the payment security mechanism and the license extensions.

These actions are targeted for completion by the end of the third quarter of 2025.

The Honorable John Abdulai Jinapor, Ghana’s Minister for Energy and Green Transition, said, “This Memorandum of Understanding between the Republic of Ghana and the DWT and WCTP partners marks a significant step forward in our nation’s energy sector. Extending the licenses to 2040 demonstrates our commitment to fostering a stable and attractive investment climate.”

”This MOU will not only ensure the continued production of oil, supporting our economic growth but also allow us to further develop our infrastructure and create more job opportunities for our citizens.”

Richard Miller, CFO and Interim CEO of Tullow, added, “This is a valuable step forward for the Government of Ghana, Tullow, and our JV partners, highlighting the collaborative and constructive relationship we all have in reaching our shared goal of building a better future for the people of Ghana, through responsible oil and gas development.”

”This extension and the fiscal stability of our contracts emphasizes the opportunity Ghana represents to deliver additional value through production and reserves additions, providing greater long-term optionality and materiality to these core assets,” he added.

Andrew G. Inglis, chairman and CEO of Kosmos, stated, “This memorandum of understanding recognizes the importance of oil and gas in Ghana and the desire of the new administration to create an attractive environment for new investment in the sector. Extending the Ghana production licenses is highly accretive, adding material reserves and enabling the partnership to continue investing in the country for the long-term.”

Price Action: KOS shares are trading higher by 2.20% to $1.86 premarket at last check Wednesday.

Read Next:

• Shell Chemical Division Sale To Improve Bottom Line: Analyst

Image via Shutterstock