Total has agreed to acquire Uganda assets of Tullow Oil PLC for $575 million plus conditional payments.
Under the terms of the deal, Total will acquire all of Tullow’s existing 33.3334% stake in each of the Uganda Lake Albert Blocks 1, 1A, 2 and 3A and the proposed East African Crude Oil Pipeline (EACOP) System that would run through Tanzania to the port of Tanga.
Tullow is operator of Block 2. Total Uganda is currently operator of Block 1 and Block 1A, and CNOOC Uganda Ltd. is operator of Block 3A (OGJ Online, Aug. 29, 2019).
Tullow’s upstream segment includes nine production and two exploration licenses in Uganda: three production licenses covering the former Block 1 area (covering Ngiri, Jobi Rii, and Gunya fields), one exploration license covering the Jobi East and Mpyo discoveries in the former Block 1 area which are subject to production license applications submitted to the Government of Uganda, and one exploration license covering Lyec field in Block 1A which is also subject to a production license application submitted to the Government of Uganda; five production licenses in the former Block 2 area (covering Mputa Nzizi Waraga, Kigogole Ngara, Nsoga, Ngege, and Kasamene Wahrindi fields); and one production license covering the Kingfisher Discovery Area (which formed part of the former Block 3A).
The proposed 897-mile, 24-in. OD EACOP pipeline, engineered by Gulf Interstate Engineering Co., would transport roughly 300,000 b/d to the Indian Ocean for export.
Total has agreed to an initial payment of $500 million at closing and $75 million when the partners take the final investment decision to launch the project. In addition, conditional payments will be made to Tullow linked to production and oil price, which will be triggered when Brent prices are above $62/bbl. Tullow plans to use net proceeds from the transaction to reduce net debt.
Completion, expected in this year’s second half, is subject to the approval of Tullow’s shareholders, to customary regulatory and government approvals, and to CNOOC’s right to exercise pre-emption on 50% of the transaction. Total will be entitled to terminate the SPA in certain circumstances.
