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  • Tullow agrees sale of its entire stake in the Lake Albert Development Project in Uganda to Total
    édité le 27/04/2020 - Plus de news de "Tullow Oil" - Voir la fiche entreprise de "Tullow Oil"

Tullow agrees sale of its entire stake in the Lake Albert Development Project in Uganda to Total
Tullow Oil plc (Tullow) is pleased to announce that it has agreed the sale of its assets in Uganda to Total for US$575 million in cash plus post first oil contingent payments with an effective date of 1 January 2020.

- Cash payments of US$500 million on deal completion and US$75 million at Final Investment Decision (FID)
- Contingent payments linked to oil price to be paid after production commences
- Principles on tax treatment of the Transaction agreed with Uganda Revenue Authority (URA)
- Transaction marks first step in portfolio management programme to raise in excess of US$1 billion
- Proceeds to be used to reduce Tullow’s net debt, strengthening the balance sheet and moving Tullow towards a more conservative capital structure
- Completion subject to a number of conditions, including approval by Tullow’s shareholders, entering into a binding tax agreement with the Government of Uganda and the URA that reflects the agreed tax principles and customary government and other approvals; completion of the Transaction is expected in the second half of 2020

Tullow and Total E&P Uganda B.V. (Total Uganda) have signed a Sale and Purchase Agreement (SPA), with an effective date of 1 January 2020 (the Effective Date), in which Tullow has agreed to transfer its entire interests in Blocks 1, 1A, 2 and 3A in Uganda and the proposed East African Crude Oil Pipeline (EACOP) System (the Uganda Interests) to Total Uganda for cash consideration of US$575 million (the Cash Consideration) plus potential contingent payments after first oil (the Transaction). Tullow is currently the operator of Block 2. Total Uganda is currently operator of Block 1 and Block 1A and CNOOC Uganda Limited (CNOOC) is operator of Block 3A.

The Cash Consideration consists of US$500 million payable at completion and US$75 million payable following FID of the Lake Albert Development Project. Additional cash consideration may be received by Tullow in the form of contingent payments which will be payable on upstream revenues from the Lake Albert Development Project, depending on the average annual Brent price once production commences.

Tullow and Total have had supportive discussions with the Government of Uganda and the URA in recent weeks, including to agree the principles of the tax treatment of the Transaction. This includes the position on Ugandan tax on capital gains, which is to be remitted by Total Uganda on behalf of Tullow Uganda, and which is expected to be US$14.6 million in respect of the Cash Consideration. Tullow Uganda and Total Uganda now intend to sign a binding tax agreement with the Government of Uganda and the URA that reflects these principles which will enable the Transaction to complete.

CNOOC has rights of pre-emption to acquire 50% of the Uganda Interests on the same terms and conditions as Total Uganda.

The Transaction will strengthen Tullow’s balance sheet as part of its financial strategy to move to a more conservative capital structure. Tullow’s capital expenditure in respect of the Uganda Interests between the Effective Date and completion of the Transaction will be recovered through the SPA completion adjustments. The Transaction will remove all future capital expenditure associated with the Lake Albert Development Project whilst retaining exposure via contingent consideration linked to production and the oil price through the contingent cash payments described above.

Under the UK Listing Rules, this is a Class 1 transaction and is therefore conditional on approval by Tullow’s shareholders, by a simple majority of voting rights in favour. Tullow has consulted with shareholders holding approximately 27.5 % in aggregate of Tullow’s issued share capital and is pleased to report that they have indicated their support for the Transaction.

Tullow will host a conference call at 9am UK time on 23 April 2020. The dial-in details can be found at the end of this release.

Dorothy Thompson, Executive Chair, commented today:
“Tullow has been a pioneering explorer in Uganda over many years and we are very proud of the role we have played in the founding and development of Uganda’s oil industry. We wish all Ugandans and our joint venture partners well as they take this important project forward.

“This deal is important for Tullow and forms the first step of our programme of portfolio management. It represents an excellent start towards our previously announced target of raising in excess of US$1 billion to strengthen the balance sheet and secure a more conservative capital structure.

We have already made good progress with the Government of Uganda and the Uganda Revenue Authority in moving this Transaction forward, including by agreeing the principles on tax treatment, and we will work closely with the Government, Total and CNOOC over the coming months to reach completion as quickly as possible. We have also received strong support from our leading shareholders and look forward to receiving formal approval of this deal.”

Background to and reasons for the Transaction

Since Tullow’s 9 December 2019 announcement, Tullow has been focused on delivering reliable production, lowering its cost base and managing its portfolio to reduce net debt and strengthen its balance sheet. The Transaction represents the first significant step in portfolio management towards raising in excess of US$1 billion of proceeds.

Completion of the Transaction will enable Tullow to realise value from the Lake Albert Development Project in Uganda, following the expiry of its previous farm-down agreement with Total and CNOOC in August 2019. Having evaluated alternatives for the project and discussed the future of the project with both of Tullow’s Joint Venture Partners and the Government of Uganda, Tullow’s Board and senior management believe the Transaction represents an attractive outcome for the Tullow group (the Group).

About Tullow Oil plc

Tullow is a leading independent oil & gas, exploration and production group, quoted on the London, Irish and Ghanaian stock exchanges (symbol: TLW). The Group has interests in over 70 exploration and production licences across 15 countries in Africa and South America.

About Total

Total is a major energy player, which produces and markets fuels, natural gas and low-carbon electricity. Our 100,000 employees are committed to better energy that is safer, more affordable, cleaner and accessible to as many people as possible. Active in more than 130 countries, our ambition is to become the responsible energy major.

Origine : Communiqué Tullow Oil

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