I don't see a partner in this deal David.
Potentially for Bauna but not for Peregrino. Reason being is Peregrino is only 40% and already operated by a strong partner in Equinor. KAR have made it obvious that they want to farm down their current interests in Brazil prior to development so bringing 100% of Bauna into the mix adds more to that.
I think its likely Peregrino will be financed via debt. I would guess they would finance the purchase probably through loan notes. I'm expecting something in the region of Libor + 3-4%. I would guess they would require something in the region of $1bn. I would think they would look to finance the Phase 2 development costs via RBL facilities or possibly even company loans with Equinor. A regular example of this in the oil industry is share of profit oil. Ie. Kar buy in at 40% ownership, but allow Equinor to take say half of this and ensure Equinor pay a higher proportion of capex. Good for both sides, reduces Kar's requirement to obtain financing and also gives Equinor more comfort and security around financing of stage 2.
I would think they would aim to do this, if they get Bauna I expect they will be looking to farm down 40-50% of their interest in Bauna, and they current development blocks to the same JV partner (probs a smaller to mid tier firm) and have this funded through a development carry on the current blocks.
That way they ensure that all of the cash generated from Peregrino / Bauna can be used to pay down debt and provide extra cash backing. If they use notes then I assume this will lead to early purchase of said notes in a few years time rather than take them to term.
I highly doubt that BS's warnings about a massive CR will come to fruition, we aren't talking a small asset here, debt funding is exactly what they need here. A CR would need to be in the region of 4 times current market cap and will wipe out current holders to such a small %. I doubt they would get away with something like that, bearing in mind that a CR of that magnitude must be voted for by shareholders.
Even at low oil prices, operating cash costs at Peregrino I would guess would be in the region of $10-12. Equinor are a great operator and have recently shown that they believe their new developments (including Peregrino stage 2) will be completed with a breakeven guide of US$40-43 (off the top of my head). A lot of this will be capex, I'm expecting as I said somewhere around $10-12 / barrel of operating costs, which at so even at oil at $50 / barrel (its heavy) then they should be generating a profit contribution of circa $60m (then less overheads which won't increase much with the acquisition as its non-operated, main increase will be in borrowing costs) and a cash contribution of $300-$340m per annum.
This is the perfect acquisition for KAR, just the sale price is the one that matters now. Even those that despise the BOD must accept that a non-operated position with a strong operator is perfect for KAR, ie. the BOD cannot stuff it up once its purchased.
(20min delay)