Tullow in Uganda farm down

Total has snapped up stakes in Tullow Oil’s Uganda exploration areas in a deal worth close to USD 1 billion, the companies announced on Monday.

The independent will transfer 21.57% of its 33.33% shareholdings in assets 1, 1A, 2 and 3A. The transaction, valued at USD 900 million, will see Tullow retain 11.76%. Total will pay out USD 200 million in cash as well as make available USD 700 million in deferred consideration. The latter sum will be directed towards funding Tullow’s share of Lake Albert project’s development cost, and will be paid upon reaching project milestones.

“Today’s agreement will allow the Lake Albert Development to move ahead swiftly, increasing the likelihood of FID in 2017 and First Oil by the end of 2020,” Tullow CEO Aidan Heavey said in a statement, adding that the arrangement would “secure future cashflow.”

Green lit by the government in August 2016, the Lake Albert project has a projected production plateau of 230,000 bopd. Plans are underway for a USD 3.5-billion export pipeline to Tanzania.

In separate comments, Total chief executive Patrick Pouyanné said the inscreased shareholding in the Lake Albert project would “bring significant value Total” in that it fits with the company’s strategy “of acquiring resources for less than USD 3/barrel with upside potential.”