Tullow Oil plc is set to increase its stakes in the Jubilee and TEN fields offshore for an expected consideration of $150 million.
The Africa-focused oil company said the closure of the transaction is subject to the full exercise of the pre-emptive rights of joint venture partners of the Deep Water Tano (DWT) Block. If that should happen, this will increase the company’s equity interests to 38.9% in the Jubilee field and 54.8% in the TEN fields.
On the whole, the company’s stake in the DWT block will increase by 7.7% to 54.8%, with payment made via the company’s existing resources.
The company estimates that this acquisition will increase daily production by 10% and generate cash flow of over $250 million between 2022 and 2026, assuming an oil price of $65 per barrel. The incremental cash flow expected from the increased production will help to accelerate debt reduction.
Tullow exercises Pre-emption right in Kosmos Energy’s Oxy transaction
Tullow said it exercised its rights of pre-emption on the DWT Block following the acquisition of additional stakes by joint venture (JV) partner, Kosmos Energy. Originally, Tullow’s pre-emption rights is in respect of an 11.05% participating interest within the offshore DWT Block.
The caveat, however is that, if Kosmos and Petro SA don’t pre-empt, Tullow would pre-empt the entire interest, increasing its shareholding in the block by 11.05% at a price of $206 million.
Based on Tullow’s reported Half Year 2021 Reserves Report, the 7.7% additional equity would increase Tullow’s net 2P reserves (proven reserves+probable reserves) by approximately 21 million barrels of oil equivalent (mmboe) with an estimated post-tax NPV valuation of $347 million.
Rahul Dhir, the Chief Executive Officer of Tullow Oil plc commented:
“This is a value accretive, self-funded opportunity for the Group which will increase Tullow’s daily Group production by 10% and generate additional cash flow to help accelerate debt reduction. Increasing our operated stakes in the Jubilee and TEN fields underscores our commitment to investing in and delivering our Ghana Value Maximisation Plan.”
Rahul Dhir, the Chief Executive Officer of Tullow Oil plc
The company’s Value Maximization Plan is a conduit through which it seeks to invest over US$4 billion over the next decade to deliver over 50 wells and ensure consistent revenue accrues to Tullow and the Government of Ghana.
The Value Maximisation Plan intends to focus on a programme of operational turnaround which is targeting in excess of 95% uptime at the FPSOs in both fields. Tullow is also making sure that both fields continue to be consistent and reliable suppliers of natural gas. Gas from the Jubilee and TEN fields contributes significantly towards Ghana’s domestic energy supply.
“This opportunity fits well with our strategy to focus on maximizing value from our producing assets. We look forward to constructive conversations with our JV Partners and the Government of Ghana as we finalise the transaction.”
Rahul Dhir, the Chief Executive Officer of Tullow Oil plc
