Tullow Oil has agreed 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) to Total for $575 million, plus first oil contingent payments.
This comes at a time when the multinational oil and gas exploration company is seeking to pay its $2.8 billion worth of debts.
The transactions will entail 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. Thereafter, $75 million will be paid when work on the Lake Albert development project begins.
Furthermore, the firm will receive additional payments if the average annual price of Brent Crude oil exceeds $62 per barrel once production commences.
According to Tullow’s press release regarding the matter, the sale will remove the company from all future capital expenditures associated with the Lake Albert Development Project, at the same time retaining potential benefits linked to production and the oil price through the contingent payments.
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.
The East African quotes Tullow Oil Executive Chairperson, Dorothy Thompson
Tullow is currently the operator of Block 2, Total Uganda; Block 1 and Block 1A, and CNOOC Uganda Limited operates Block 3A.
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