Tullow buys Heritage acreage in Uganda; Eni nudged out
Tullow Oil PLC, making good on earlier pledges, said its subsidiary Tullow Uganda Ltd. has exercised its “right of preemption” regarding the proposed sale by Heritage Oil & Gas Ltd. (HOGL) of its 50% interest in Blocks 1 and 3A in Uganda.
OGJ Oil Diplomacy Editor
LOS ANGELES, Jan. 19 -- Tullow Oil PLC, making good on earlier pledges, said its subsidiary Tullow Uganda Ltd. has exercised its “right of pre-emption” regarding the proposed sale by Heritage Oil & Gas Ltd. (HOGL) of its 50% interest in Blocks 1 and 3A in Uganda.
Tullow Uganda said it will enter into a sale and purchase agreement with HOGL, subject to approval by Heritage shareholders at a meeting scheduled for Jan. 25 as well as receipt of “necessary consents from the Ugandan government.”
“Over the last 6 years, Tullow and Heritage have invested over $700 million in the Lake Albert Rift basin in drilling 27 wells to prove up over 700 million bbl of oil and identify over 1.5 billion bbl of potential yet to be explored,” said Tullow Chief Executive Officer Aidan Heavey.
For its part, Heritage confirmed the pending transaction, saying that the Ugandan government “will determine which transaction to approve (either the acquisition by Eni [SPA] or Tullow’s pre-emption of such acquisition) in its role as final arbiter.”
According to Heritage, “Eni has the option to terminate the [sale and purchase agreement] following an exercise by Tullow of its pre-emption rights, which Eni has not so far done.”
Heritage Chief Executive Officer Tony Buckingham stated, “We look forward to gaining approval from our shareholders and government to enable the transaction with either Eni or Tullow to complete.”
Meanwhile, Heritage said it remains able to accept any superior proposal (unmatched by Tullow) made by any other party at any time prior to Heritage’s shareholders’ Jan. 25 meeting.
Heritage summarized the position in several key points:
• Tullow has exercised its right to pre-empt the sale of the disposed assets on the same terms and conditions as agreed in the sale and purchase agreement entered into between Heritage and Eni.
• Heritage is seeking shareholder approval of the transaction at a general meeting to be held on Jan 25.
• Final approval will be sought shortly from the government and the transaction is expected to close within the first quarter.
• When the transaction closes, Heritage will receive $1.35 billion in cash and a further contingent, deferred consideration of up to $150 million in cash or an interest in a mutually agreed asset.
In December, Tullow said it might try to block a plan by Heritage to sell its 50% interest in Ugandan Blocks 1 and 3A to Eni for as much as $1.5 billion (OGJ Online, Dec. 16, 2009).
Contact Eric Watkins at email@example.com.