Tullow Oil Company has sold all its assets in Uganda to Total Uganda at Sh61.7 billion ($575 million) to reduce its debt, with bids for selling the Kenyan unit scheduled to follow.
Tullow said it will transfer all its interests in Blocks 1, 1A, 2 and 3A in Western Uganda and the proposed East African Crude Oil Pipeline (EACOP) System for cash consideration of Sh61.7 billion plus potential contingent payments after first oil.
It is an important deal for the British Oil explorers as it forms its major steps towards portfolio management and excellent start towards their target of raising Sh107 billion ($1 billion) to strengthen their balance sheet and secure a more conservative capital structure.
“This Cash Consideration consists of Sh53.62 billion ($500 million) payable at completion and Sh8 billion ($75 million) payable following final investment decision of the Lake Albert Development Project” said Dorothy Thompson, Tullow’s executive chairperson.
Ugandan sale will boost Tullow’s balance sheet as part of its financial strategy to move to a more conservative capital structure.
The deal will do away with all future capital expenditures associated with the Lake Albert Development Project and at the same time retaining potential benefits linked to production and the oil price through the contingent payments.
Tullow Oil PLC has been the operator of Block 2. while Total Uganda is the current operator of Block 1 and Block 1A with China National Offshore Oil Corporation (CNOOC) Uganda Limited being the operator of Block 3A.