Total confirmed it would acquire part of Tullow Oil’s stake in an Ugandan project for $900million.
The French oil operator has bought the controlling stake in the Lake Albert development.
The deal includes an initial $100million payment in cash. An additional $100million will paid when the project produces first oil. The remaining $700million will be used by Tullow as “deferred consideration” to fund its shares of the costs.
Chief executive officer Patrick Pouyanne said: “Our increased share in the Lake Albert project will bring significant value to Total and fits with our strategy of acquiring resources for less than $3 a barrel with upside potential.”
The field is expected to start producing in 2021. There is an estimated 1.7billion barrels of oil in the fields located at the Lake Albert basin. The Ugandan governments expects to generate $43billion of revenue for the country.
The Lake Albert Development Project expects to achieve around 230,000 bopd when it reaches plateau.
Tullow chief executive Aidan Heavey said: “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.”
The deal leaves Total with a 54.9% stake in the project and Tullow with 11.76%.