Tullow Oil has completed the sale of its Ugandan assets to Total, receiving $500 million.
Total will pay another $75mn to Tullow when the French company reaches a final investment decision (FID). Total may also make further contingent payments, linked to the oil price.
“The closing of our transaction with Total clearly evokes mixed emotions within Tullow. While we are sad to be exiting Uganda after many years, the $575 million of proceeds form an important part of our plan to strengthen Tullow’s balance sheet and improve our financial position,” said Tullow’s CEO Rahul Dhir.
“We will watch the progress of Uganda’s oil & gas industry with much interest and all of us at Tullow wish the people and government of Uganda and our former joint venture partners every good fortune as they take this important project forward.”
Tullow announced a tax settlement had been agreed, on October 21. The company’s agreement with the government paved the way for the transfer of the assets. Tullow had tried to sell down its stake before, but ran into difficulties on the tax issue.
Shareholders agreed the sale in July.
The company has net debt of $2.4 billion and available liquidity of $1bn. Tullow will set out its plans for the coming years at its capital markets day on November 25.
The sale brings to an end Tullow’s work in Uganda, where it has operated for 16 years in the Lake Albert Basin. The company bought Energy Africa in 2004, taking three exploration licences in the area. It increased its stake in the country with the acquisition of Hardman Resources in 2007.
Total and CNOOC Ltd will now go ahead with the Lake Albert project. The companies have repeatedly delayed the FID but there has been speculation that this step may come before the end of the year.
The project should reach production of around 230,000 barrels per day at plateau. The operator will export oil to Tanzania’s port of Tanga, via the world’s longest heated pipeline.