Total and Tullow Oil have entered into a package agreement under which Total will acquire an additional 21.57% interest from Tullow in the Lake Albert Development Project in Uganda.
Total and Tullow had 33.3% interest respectively in this project. Following the transaction, Total will hold a 54.9% interest, strengthening its position in the project and paving the way for a project sanction in the near future. Tullow will retain 11.76% interest in the upstream and pipeline. The overall consideration paid by Total to Tullow will be $900 million.
The agreement is based on the transfer of licence interests from Tullow to Total in exchange for $200 million in cash and $700 million in deferred consideration to be paid as and when the Lake Albert project reaches a series of key milestones and represents a reimbursement by Total of a portion of Tullow’s past exploration and development costs. “Our increased share in the Lake Albert project will bring significant value to Total and fits with our strategy of acquiring resources for less than 3$/barrel with upside potential,” said Patrick Pouyanné, Total Chairman and CEO.
Tullow expects the Lake Albert Development Project to reach a plateau of around 230 000 barrels of oil. “We will work closely with the Government of Uganda, its associated agencies and with Total and CNOOC to move this transaction forward as smoothly as possible over the coming months,” said Aidan Heavey, Tullow Oil plc CEO.
In April 2016, the Government of Uganda agreed on an export route for the Lake Albert oil through a pipeline via Tanzania to the port of Tanga and in August 2016 production licences were granted to Tullow and Total.
The Lake Albert Development Project is close to Lake Albert, the northernmost of the lakes in the Albertine Rift. Lake Albert is on the border of Uganda and the Democratic Republic of Congo.
Closing of the transaction is subject to customary regulatory and government approvals and to partner pre-emption rights.
Image: Courtesy Tullow Oil plc