Tullow Oil has announced the sale of its total interest in Tullow Guyana B.V. which includes its 60% operated stake in the Orinduik licence.
Eco Guyana Oil and Gas will dish out a US$700,000 cash payment following the transfer of the share in the Orinduik licence from Tullow Guyana B.V. (TGBV).
The cash will be paid to Tullow Overseas Holdings B.V. upon completion of the transaction.
Contingent consideration will be payable, depending on a series of potential future milestones.
Eco will dish out $4 million in the event of a commercial discovery, $10m once a production licence is granted by the Government of Guyana, and royalty payments will be made on future production, 1.75% of the 60% working interest entitlement revenue net of capital expenditure and lifting costs.
Tullow says that the transaction for the licence is set to be complete in the “second half” of the year.
Jean-Medard Madama, director of exploration, non-operated assets and decommissioning, said: “This transaction is in line with our strategy to optimise our portfolio through opportunities to unlock value from our emerging basin licences, whilst focusing our capital expenditure on our high return producing assets and growth opportunities around existing infrastructure.”
Gil Holzman, president and chief executive of Eco Atlantic, commented: “We are delighted to have reached this agreement with Tullow and to be able to begin to unlock the Orinduik Block’s full potential.
“Since 2014, we have believed in the potential of this Block, with our initial two wells in 2019 proving two different oil plays.
“We will proactively engage in a farm out process for this highly prospective license and begin preparations to drill a well testing the cretaceous, where all light oil discoveries have been made in the adjacent Stabroek Block.”
Eco already had a stake in the Orinduik block before the transaction, in 2016 the firm entered into a Petroleum Agreement which granted it a 40% working interest in the block with Tullow, as operator, holding 60%.
The Orinduik license had been previously described as facing a “bottleneck” by Eco’s chief executive Gil Holzman said when Tullow looked to sell.
Mr Holzman explained: “Until the Tullow problem is solved, we are stuck.”
Now that Eco has taken over Tullow’s stake in the Orinduik licence, may be looking to progress with the development.
However, in 2019, Tullow drilled two exploration wells on the Orinduik licence which yielded uncommercial oil discoveries.
Tullow did say in its announcement of the sale that it “recognises the material oil resource potential remaining in the Orinduik licence.”