LONDON, Sep 2 – Anglo-Irish energy firm Tullow Oil said on Thursday that it would buy a 50 percent stake in six exploration licences in Kenya and Ethiopia, expanding its reach in East Africa.
Tullow, which is already a major player in the continent, will pay Canada\’s Africa Oil Corp up to $33.75 million for a share of six licences that cover two exploration blocks in Kenya and one in Ethiopia.
"Tullow Oil plc announces the acquisition of a 50 percent operated interest in six adjacent licences covering the East African Rift Basins of Kenya and Ethiopia, an area of 97,000 square kilometres," it said in a statement.
The British explorer will pay about $10 million for Africa Oil\’s past costs, and an additional $23.75 million for its share of future expenditure, the Canadian firm added in a separate statement. The deal is subject to regulatory approval.
"We are delighted to be extending our acreage across the prospective East African Rift Basins of Kenya and Ethiopia," said Angus McCoss, exploration director at Tullow Oil.
"Rift Basins are a core play for Tullow and to date we have discovered and identified resources in excess of 2.5 billion barrels in the Lake Albert Rift Basin in Uganda."
"We look forward to working with our new partners and applying our valuable technical insights to this under-explored frontier region of East Africa."
Tullow has operations across 22 countries in four core regions that comprise Africa, Europe, South Asia and South America.
In Africa, the group has interests in a host of countries that include Angola, Congo, Equatorial Guinea, Gabon, Ghana, Ivory Coast, Mauritania and Uganda.
Tullow has achieved a very "cheap" price for Africa Oil Corp\’s assets, according to Peter Hutton, energy analyst at NCB Stockbrokers in Dublin.
"It is (a) very cheap entry cost," Hutton told AFP.
"Drilling in Kenya can be expensive – wells have costs up to $100 million each, according to local press reports.
"Tullow are not exactly throwing money at this. It is a low cost entry into an area where they have some experience of similar geologies."
Africa Oil Corp, which has assets in Kenya, Ethiopia and Somalia, is listed on the Toronto stock market. Tullow is listed in Dublin and London.