Oct. 13 (Bloomberg) -- Exxon Mobil Corp.’s agreement to buy the Ghana oil assets of Kosmos Energy LLC marks an effort by the world’s most valuable company to acquire what it couldn’t find after drilling dry holes in West Africa.

Closely held Kosmos, backed by Blackstone Group LP and Warburg Pincus LLC, said yesterday it agreed to sell its Ghana properties to Irving, Texas-based Exxon Mobil. The deal, which a person familiar with the sale estimated to be worth at least $4 billion, may still be blocked by Ghana’s government.

“Exxon Mobil is looking to expand there because West Africa is the place to be right now if you’re an international oil company,” said David Foley, who oversees $2.2 billion in assets, including Exxon Mobil shares, at Estabrook Capital Management in New York. “It’s one of the few places in the world where a company like Exxon can put the tons of cash it has laying around to good use.”

Ghana National Petroleum Corp. is still seeking to acquire a stake Kosmos holds in the offshore Jubilee oilfield, Thomas Manu, director of exploration and production at the state-owned oil company, said in a telephone interview today. Ghana National would then consider proposals from other foreign oil companies to enter a partnership, he said.

China National Offshore Oil Corp. is in talks with Ghana National on making a bid for Kosmos’s stake in Jubilee, the Wall Street Journal said yesterday, citing unnamed people.

Xiao Zongwei, a Beijing-based spokesman for Cnooc Ltd., the listed arm of state-controlled China National Offshore Oil, declined to comment on the report.

‘Completely Reasonable’

“It’s completely reasonable that Cnooc could make a counter offer to match any bid from Exxon for the stake in the Jubilee field,” said Gordon Kwan, head of regional energy research in Hong Kong at Mirae Asset Securities. “It has $10 billion in cash on its books and virtually no debt.”

The agreement with Exxon Mobil is binding, Kosmos Chief Financial Officer Greg Dunlevy said in an e-mail yesterday. When asked about the Ghana purchase, Exxon Mobil spokesman Patrick McGinn said he wasn’t immediately able to comment.

The purchase would give Exxon Mobil a 23.49 percent stake in Jubilee, as well as nearby prospects in Ghana’s Gulf of Guinea waters. After discoveries in the late 1990s and early 2000s made Africa the top source of crude for Exxon Mobil, the company’s exploration efforts stumbled the past two years. More than half of African exploration wells in 2007 and 2008 failed to find commercial quantities of oil, a company filing showed.

Output Target

The Jubilee stake will add about 28,000 barrels of daily oil production, the equivalent of 1.2 percent of Exxon Mobil’s worldwide crude output in the second quarter. The company may not meet its 2 percent target for production growth this year, Senior Vice President Mark Albers told analysts at a conference last month. Jubilee is scheduled to enter service in late 2010.

Exxon Mobil Chief Executive Officer Rex Tillerson is spending $79 million a day to search for reserves and build oil platforms after production fell in 2008 to the lowest since the 1999 acquisition of Mobil Corp.

The company is buying fields and prospective discoveries identified by a team of Kosmos explorers that includes Chief Operating Officer Brian Maxted and Senior Vice President Paul Dailly, both former geologists at London-based BP Plc.

Maxted made a series of discoveries off Equatorial Guinea for Triton Energy Ltd. in the 1990s that culminated in the $3.2 billion acquisition of Triton by Hess Corp., then known as Amerada Hess Corp., in 2001.

Exxon in Africa

Exxon Mobil already operates oil fields in other nations that rim the Gulf of Guinea, including Nigeria and Equatorial Guinea, as well as onshore wells in Chad. The deal with Dallas- based Kosmos would mark the company’s entry to Ghana, which will become Africa’s newest oil exporter with Jubilee’s start-up.

Other companies with stakes in Jubilee include London-based Tullow Oil Plc, which is also the operator; Anadarko Petroleum Corp., based near Houston; Sabre Oil & Gas; EO Group; and Ghana National.

Buying a major asset rather than finding its new reserves is “very much out of sync” with how Exxon Mobil has grown in the past, said Doug Ober, who helps manage more than $600 million in energy investments as chief executive officer at Petroleum & Resources Corp. in Baltimore. “We think it could portend a new era in the life of Exxon,” he said.

Chinese Investments

During the past three years, Chinese oil companies have announced $16 billion in investments to gain access to Africa’s untapped reserves. China is the world’s largest petroleum consumer after the U.S. Other major producers of African oil include Royal Dutch Shell Plc, Chevron Corp. and Total SA.

“China is an aggressive bidder,” said Ober, whose biggest holding is Exxon Mobil shares. “Depending on how much Exxon wants this property, you can see them pushing Exxon to raise their bid for these properties.”

Kwan at Hong Kong’s Mirae Asset Securities said Cnooc may be ready to bid more than $4 billion for the Jubilee stake.

“The oil in the Jubilee field is light, clean oil that China needs, compared with the heavier dirtier crude it produces offshore in China in Bohai bay,” Kwan said.

Exxon Mobil rose 86 cents, or 1.2 percent, to $70.13 yesterday in New York Stock Exchange composite trading. The stock has dropped 12 percent this year. Cnooc shares rose 2.15 percent to HK$11.40 at 10:59 a.m. in Hong Kong. The stock has risen 57 percent this year.

Exxon Mobil drilled 11 net exploration wells in Africa in 2007 and 2008, six of which turned up dry, according to a company filing. Even so, Africa is one of the cheapest places in the world for the company to pump oil. With an average production cost of $6.66 per barrel, Exxon Mobil’s African crude is less than half the cost of the company’s Canadian output.

Africa is also home to 21 percent of Exxon Mobil’s worldwide crude reserves. The continent accounts for 27 percent of the company’s global crude production.

To contact the reporters on this story: Joe Carroll in Chicago at jcarroll8@bloomberg.net; Edward Klump in Houston at eklump@bloomberg.net.

Last Updated: October 13, 2009 07:06 EDT