Press

Tullow announces a substantial farm down to Total in Uganda

Posted by OilVoice Press

10-Jan-2017


Tullow Oil plc (Tullow) is very pleased to announce that it has agreed a substantial farm-down of its assets in Uganda to Total E&P Uganda B.V. (Total).  

A Sale and Purchase Agreement with an effective date of 1 January 2017 has been signed in which Tullow has agreed to transfer 21.57% of its 33.33% interests in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total for a total consideration of $900 million. This agreement will allow Tullow to retain an 11.76% interest in the upstream and pipeline, which would reduce to 10% when the Government of Uganda formally exercises its right to back-in.

This agreement is based on the transfer of licence interests from Tullow to Total in exchange for cash and deferred consideration to be paid as and when the Lake Albert Development Project reaches a series of key milestones and represents a reimbursement by Total of a portion of Tullow's past exploration and development cost. The total consideration for the transaction is structured as follows:

  • $200 million in cash consisting of $100 million on completion of the transaction and $50 million at both Final Investment Decision and First Oil. 
  • $700 million in deferred consideration which will be used by Tullow to fund the company's share of the costs of the upstream development project and the associated export pipeline project.

The Lake Albert Development Project is a major development which expects to achieve around 230,000 bopd when it reaches plateau. Development Plans were approved by the Government in August 2016 which Tullow expects will require $5.2 billion gross of upstream capex to develop the first 1.2 billion barrels of oil with $3 billion expected to be required to reach First Oil around three years after FID. The Government of Uganda has agreed an export route through Tanzania and the current estimate for the pipeline capital cost is around $3.5 billion. The pipeline is expected to be funded through a combination of debt and equity. Tullow carries approximately $1.7 billion for Uganda which includes fair value allocations and capitalised interest. The Group expects a pre-tax write-off as a result of this disposal of approximately $0.4 billion to be booked in its 2016 Full Year Results.

Completion of this transaction is subject to certain conditions, including the approval of the Government of Uganda. Once this transaction has completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position.

Aidan Heavey, Chief Executive Officer, commented today:
"Today's agreement will allow the Lake Albert Development to move ahead swiftly, increasing the likelihood of FID in 2017 and First Oil by the end of 2020. I am particularly pleased that Tullow's long-term commitment to and presence in Uganda is guaranteed by this transaction and that we will remain an active investor in Uganda's oil and gas sector. The deal will secure future cash flow for the Group from one of the industry's few truly low cost development projects without any additional cash requirements expected. We will work closely with the Government of Uganda, its associated agencies and with Total and CNOOC to move this transaction forward as smoothly as possible over the coming months."


Tullow OilUganda

More items from oilvoice


U.S. crude oil production increases following higher drilling activity

Source: U.S. Energy Information Administration, Short-Term Energy Outlook U.S. crude oil production increased for the second consecutive month in November 2016, the first time this has occurred since early 2015. Increased drilling activity in the Permian region, which spans Texas and New Mex ...

OilVoice Press


Posted 16 hours agoPress > Energy Information Administration EIACrude

Kongsberg Maritime: Reshaping Underwater Operations – Live Footage of Groundbreaking Robotic Subsea ‘Snake’ Released

First live trials of the Eelume underwater robot took place in Trondheim, Norway First live testing of unique robot set to revolutionise underwater intervention operations Watch footage of the state-of-the-art Eelume robot in action: https://www.youtube.com/watch?v=nGa3g2Hifzc Eelu ...

OilVoice Press


Posted 16 hours agoPress > KongsbergSubsea

Mexico turns to the Jurassic era for shale oil: Fuel for Thought

Mexico's plans to develop its shale oil resources have finally taken a step forward following years of largely fruitless efforts by the state owned company Pemex. Canada's Renaissance Oil and Russia's Lukoil are joining forces to develop the Amatitlan block of the Chicontepec region. They aren't ...

OilVoice Press


Posted 16 hours agoOpinion > PlattsMexicoShale

China’s independent refiners could get regulated away: Fuel for Thought

China's regulatory pendulum has swung from supporting independent refiners by encouraging competition and deregulation to favoring state-owned oil companies, which could have the impact of regulating many of the independents out of business. In early 2015 China's independent refiners, or teapots, ...

OilVoice Press


Posted 16 hours agoOpinion > PlattsChinaRefining

Oil price, Wood Group, And finally…

Oil price A weak dollar ahead of the Fed meeting helped in a quiet market with the US closed for Presidents Day. Net long positions have crept up to another high and with the data from Saudi Arabia confirming the cutbacks, the price picked up. A short blog today as I am off to see a couple of com ...

OilVoice Press


Posted 1 day agoOpinion > Malcy's BlogWood Group
All posts from oilvoice