Connect with us

Hi, what are you looking for?

Capital Business
Capital Business


Tullow sells stake in oil sites to Total Uganda for Sh93Bn

The transaction leaves Tullow with 11.76 percent stake in the upstream and pipeline, which would reduce to 10 percent when the Government of Uganda formally exercises its right to buy back.

NAIROBI, Kenya, Jan 10 – Tullow Oil plc has offloaded 21.57 percent of its stake in four exploration areas in Uganda for $900 million (Sh93 billion) to Total Uganda.

The transaction, referred to as a farm down in the oil and gas industry, is based on the transfer of license interests from Tullow to Total in exchange for upfront cash and future payments to be paid when key milestones are achieved.

Total has paid $200M (Sh23 billion) as part of reimbursement Tullow has invested in the exploration and development of the sites, including $50 million paid at both final investment decision and first oil.

“$700 million in deferred consideration which will be used by Tullow to fund the company’s share of the costs of the upstream development project and the associated export pipeline project,” said Tullow in a statement.

The transaction leaves Tullow with 11.76 percent stake in the upstream and pipeline, which would reduce to 10 percent when the Government of Uganda formally exercises its right to buy back.

Tullow CEO Aidan Heavey says the deal will secure future cash flow for the Group from one of the industry’s few truly low cost development projects without 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,” said Heavey.

Development Plans for the Lake Albert project were approved by the Government in August 2016 which Tullow expects will require $5.2 billion gross of upstream capex to develop the first 1.2 billion barrels of oil with $3 billion expected to be required to reach First Oil around three years after FID.

The Government of Uganda opted to use the Tanzania route after talks with Kenya collapsed with pipeline capital cost estimated at $3.5 billion, which Uganda considered cheaper.

The pipeline is expected to be funded through a combination of debt and equity.

Advertisement. Scroll to continue reading.

Tullow carries approximately $1.7 billion for Uganda which includes fair value allocations and capitalised interest.

The Group expects a pre-tax write-off as a result of this disposal of approximately $0.4 billion to be booked in its 2016 Full Year Results.

Completion of this transaction is subject to certain conditions, including the approval of the Government of Uganda.

Click to comment

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...


NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...


NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...


NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...


NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...