This archive report was first published on 23 April 2020.
On April 23, 2020, Tullow Oil announced a significant deal with Total, agreeing to sell its entire stake (33.3%) in the Lake Albert Development Project in Uganda (Blocks 1, 1A, 2 and 3A, and the proposed East African Crude Oil Pipeline System) for $575 million, plus first oil contingent payments.
The sale comes as Tullow Oil seeks to pay off its $2.8 billion worth of debts. The transactions will involve Tullow handing over its entire stake in Uganda and the proposed East African Crude Oil Pipe System to Total Uganda for cash payments of $500 million, with an additional $75 million to be paid when work on the Lake Albert development project begins.
Tullow will also receive additional payments if the average annual price of Brent Crude oil exceeds $62 per barrel once production commences. According to Tullow, the sale will remove the company from all future capital expenditures associated with the Lake Albert Development Project, while retaining potential benefits linked to production and the oil price through the contingent payments.
As Tullow Oil Executive Chairperson Dorothy Thompson noted, 'This deal is important for Tullow. It represents an excellent start towards our target of raising $1 billion to strengthen the balance sheet, and also secure a more conservative capital structure.'
