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Tullow Oil sells Uganda assets to Total

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Oilfield Technology,

Tullow and Total E&P Uganda B.V. have signed a sale and purchase agreement (SPA), with an effective date of 1 January 2020, in which Tullow has agreed to transfer its entire interests in Blocks 1, 1A, 2 and 3A in Uganda and the proposed East African crude oil pipeline (EACOP) system to Total Uganda for cash consideration of US$575 million plus potential contingent payments after first oil.

Tullow is currently the operator of Block 2. Total Uganda is currently operator of Block 1 and Block 1A and CNOOC Uganda (CNOOC) is operator of Block 3A.

The cash consideration consists of US$500 million payable at completion and US$75 million payable following final investment decision (FID) of the Lake Albert Development project. Additional cash consideration may be received by Tullow in the form of contingent payments which will be payable on upstream revenues from the Lake Albert Development project, depending on the average annual Brent price once production commences.

CNOOC has rights of pre-emption to acquire 50% of the Uganda Interests on the same terms and conditions as Total Uganda.

Dorothy Thompson, Executive Chair, commented: “Tullow has been a pioneering explorer in Uganda over many years and we are very proud of the role we have played in the founding and development of Uganda’s oil industry. We wish all Ugandans and our joint venture partners well as they take this important project forward.

“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 US$1 billion to strengthen the balance sheet and secure a more conservative capital structure.

We have already made good progress with the Government of Uganda and the Uganda Revenue Authority in moving this Transaction forward, including by agreeing the principles on tax treatment, and we will work closely with the Government, Total and CNOOC over the coming months to reach completion as quickly as possible. We have also received strong support from our leading shareholders and look forward to receiving formal approval of this deal.”

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