This archive report was first published on 23 April 2020.
On April 23, 2020, Tullow Oil Plc announced the sale of its Ugandan assets to Total Uganda for $575 million, a significant step in its debt reduction strategy.
The deal involves the transfer of Tullow's entire interests in Blocks 1, 1A, 2, and 3A in western Uganda, as well as the proposed East African Crude Oil Pipeline (EACOP) System.
According to Dorothy Thompson, Tullow's executive chairperson, 'This deal is important for Tullow and forms the first step of our programme of portfolio management. It represents an excellent start towards our previously announced target of raising in excess of Sh107 billion ($1 billion) to strengthen the balance sheet and secure a more conservative capital structure.'
The cash consideration consists of $500 million payable at completion and $75 million payable following the final investment decision of the Lake Albert Development Project.
With this deal, Tullow aims to eliminate all future capital expenditure associated with the Lake Albert Development Project while retaining potential benefits linked to production and the oil price through contingent payments.
As part of the deal, Total Uganda will take over as the operator of Blocks 1 and 1A, while China National Offshore Oil Corporation (CNOOC) Uganda Limited will continue to operate Block 3A.
