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Tuesday, January 10, 2017
A sale and purchase agreement has been entered into between Tullow Oil and Total E&P Uganda, that has Tullow farming down a substantial slice of its assets in Uganda.
Under the agreement, which has an effective date of January 1, Tullow has agreed to transfer 21.57% of its interests in Exploration Areas 1, 1A, 2, and 3A. Tullow will receive a total consideration of $900 million in exchange for the interest transferred to 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 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 license 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 allowing Total to pay $200 million in cash consisting of $100 million on completion of the transaction and $50 million at both FID and first oil. The remaining $700 million is deferred and 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.
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.
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