Tullow Oil and Total have started the process to sell part of their stakes in oil discoveries in Kenya, said people familiar with the matter.
The French energy giant is seeking to sell half of its 25% stake in the fields, said one of the people. Tullow said last year that it planned to reduce its holding to 30% from 50%.
Tullow’s sale is part of a broader review of its operations and assets intended to simplify the business and cut costs. Shares of the company slumped 64% last year due to disappointing exploration results in South American and lower-than-expected production from its main oil asset in Ghana. Chief Executive Officer Paul McDade and exploration chief Angus McCoss left the company in December.
The oil discoveries in eastern Kenya haven’t yet been brought to the market. A plan for initial development was suspended in the fourth quarter after severe weather damaged roads, and will remain so until they can be repaired, Tullow said on Jan. 15. Full exploitation of the resources would require a $1.1 billion pipeline to the coast of east Africa. Reuters was first to report the companies’ sale plans.
Tullow faces a similar challenge in monetizing more than a billion barrels of oil resources in eastern Uganda, which remain locked deep underground despite being discovered about a decade ago. Work on a $3.5 billion pipeline to deliver that oil to international markets is on hold after the company’s plan to sell a 22% stake in those assets to Total fell apart last year.