Tullow Oil Plc has announced that it has agreed to sell its total interest in Tullow Guyana B.V. (TGBV), which includes the Orinduik licence (Tullow 60% operated equity) in Guyana to Eco Guyana Oil and Gas (Barbados) Limited (Eco) in exchange for a combination of upfront cash and contingent consideration.

Tullow’s decision to exit the Orinduik licence is in line with its strategy to focus on its high return production assets in Africa and infrastructure-led exploration around producing hubs and deliver its objective to unlock value in emerging basins.

In 2019, Tullow drilled two exploration wells on the Orinduik licence which yielded uncommercial oil discoveries.

Nonetheless, Tullow said in an update that it recognises the material oil resource potential remaining in the Orinduik licence and as such, the terms of the Transaction allow Tullow to retain exposure to any potential future success in the region.

Transaction Summary

Per the agreement, a total of US$700,000 cash payment upon transfer of TGBV’s 60% equity and operatorship of the Orinduik licence to Eco, to be paid to Tullow Overseas Holdings B.V. (“TOHBV”) on completion of the Transaction (the “Initial Consideration”).

Contingent consideration is payable to TOHBV, which is linked to a series of potential future milestones and triggered as follows: US$4 million in the event of a commercial discovery; US$10 million payment upon the issuance of a production licence from the Government of Guyana; Royalty payments on future production – 1.75% of the 60% working interest entitlement revenue net of capital expenditure and lifting costs.

Transaction and payment of the Initial Consideration outlined above is subject to certain market-standard conditions precedent, including Government and JV approvals.

Proceeds from this transaction will be put towards general corporate purposes. Meanwhile, completion is expected to occur in the second half of 2023.

The Value of the Transaction

Jean-Medard Madama, Director Exploration, Non-Operated Assets and Decommissioning, highlighted the value of the transaction.

“This transaction is in line with our strategy to optimise our portfolio through opportunities to unlock value from our emerging basin licences, whilst focusing our capital expenditure on our high return producing assets and growth opportunities around existing infrastructure.”

On 23 April 2020 Tullow announced that it had agreed the sale of its assets in Uganda to Total for US$575 million in cash plus post first oil contingent payments with an effective date of 1 January 2020.

In 2021, Tullow Oil was ranked no. 49 in the Arctic Environmental Responsibility Index (AERI) that covers 120 oil, gas, and mining companies involved in resource extraction north of the Arctic Circle.

In a share-only merger, Tullow Oil acquired Capricorn Energy on 1 June 2022. After the deal closes, Tullow will own 53 percent of Capricorn. Capricorn Energy has assets in Mauritania and Egypt.

Tullow Oil plc is a multinational oil and gas exploration company founded in Tullow, Ireland, with its headquarters in London, United Kingdom. The company is listed on the London Stock Exchange.