Kampala – Tullow Oil has, on Thursday, April 23, announced the agreed sale of its assets in Uganda to Total Uganda for UGX2Trn (USD575 million)
In a signed Sale and Purchase Agreement (SPA), Tullow consented to a transfer to Total Uganda an entirety of its 33.3334% interests in each of the assets comprising the Lake Albert Development Project to Total E&P Uganda B.V. (Total Uganda)
“The SPA is based on the transfer of interests from Tullow Uganda to Total Uganda in exchange for cash at completion, deferred consideration to be paid as and when the Upstream Segment and Midstream Segment of the Lake Albert Development Project reach FID and contingent payments determined on the basis of future oil prices,” the statement clarified.
Tullow Oil’s Executive Chair, Dorothy Thompson, welcomed the deal affirmed that it an excellent start towards the London-listed independent oil explorer’s target of raising in excess of US$1 billion.
“This deal is important for Tullow and forms the first step of our programme of portfolio management. It represents an excellent start towards our previously announced target of raising in excess of US$1 billion to strengthen the balance sheet and secure a more conservative capital structure,” Ms Thompson disclosed.
However, the latest arrangement will deliver more cash for Tullow. Under the previous agreement, it would only have received $100m upon completion, $50m when the final investment decision was made and $50m when the first oil was produced. The remainder of the $900m would have funded its own costs towards developing the Lake Albert project
Total E&P Uganda hailed the agreement citing it was in line their strategy of acquiring long-term resources.
“We are pleased to announce that a new agreement has been reached with Tullow to acquire their entire interests in the Lake Albert development project for less than 2$/bbl in line with our strategy of acquiring long-term resources at low cost, and that we have an agreement with the Uganda government on the fiscal framework,” said Patrick Pouyanné, Total Chairman and CEO.
This comes barely six months after a deal crumbled with Tullow Oil shares falling more than 5% subsequent to the Irish founded exploration company terminating of its long-standing agreement to sell a third of its interests to Total Uganda in a UGX3.2Trn ($900m) botched settlement.
The Appointment of Rahul Dhir as Tullow oil CEO
Last week, Tullow oil confirmed the appointment of Rahul Dhir as new Chief Executive officer and an executive director of the business effective July 1, 2020, replacing the Paul McDade who threw in the towel.
Currently the CEO of Delonex Energy, an Africa-focused oil and gas company that he founded in 2013, Dhir brings to Tullow Oil a wealth of experience in oil and gas, financial and African experience.
The arrival of the former managing director and CEO of Cairn India (2006 -2012) will see Dorothy Thompson, current Executive chair of Tullow Oil return to her position as non-executive chair after a “limited period”
Dorothy Thompson was appointed executive chair on a temporary basis and Mark MacFarlane, executive vice president of East Africa and non-operated, named chief operating officer in a non-board role, according to the statement.
CEO Paul McDade and Exploration chief Angus McCoss exits
Tullow Oil outgoing chief executive officer and exploration director quit after a slew of operational setbacks, marking the exit of the old guard after founder Aidan Heavey departed last year. Shares slumped.
CEO Paul McDade and exploration chief Angus McCoss resigned by mutual agreement and with immediate effect, London-based Tullow said Monday, December 2, 2019 as it suspended the dividend.
Both had been stalwarts at the company for over a decade, presiding over discoveries from West Africa to Guyana, but also a 90% slide in the share price since 2012.
“The Board has, however, been disappointed by the performance of Tullow’s business and now needs time to complete its thorough review of operations. A full financial and operational update will be provided at Tullow’s Full Year Results on 12 February 2020, with an update on progress to be given in the Group’s Trading Statement on 15 January 2020,” Executive Chair Dorothy Thompson acknowledges in a December 9, 2020 statement
Tullow oil’s Tumbling share pricing
“Whilst financial performance has been solid, production performance has been significantly below expectations from the group’s main producing assets, the TEN and Jubilee fields in Ghana,” Tullow said in a statement.
Africanminingmarket.com revealed that Group output was projected at 70,000 to 80,000 barrels a day for 2020— down from the 87,000 a day expected for 2019 — and production for the following three years will hover around the bottom of that range.
“This is likely to have a negative impact on the valuations of Tullow’s key assets,” Al Stanton, an analyst at RBC Europe Ltd., said in a note. “We expect the pace of exploration activity, and therefore news flow, to be reined in.”
Suddenly the shares tumbled 43% in London Stock Exchange (LSE) to 80.38 pence as of December 9; dropping 55% in 2019.
Tullow Oil Uganda’s Jimmy Mugerwa recalled to London
Mr Jimmy Mugerwa, the first indigenous general manager for oil giant Tullow Oil has been recalled to the head office in London, United Kingdom,
The move, although looking like a promotion, but according to reports followed incessant bad press Mr Mugerwa has been attracting in Uganda as DFCU bank’s board chairman.
“Mariam Nampeera Mbowa, Tullow’s Associate General Counsel in Uganda, has been promoted to be Country Manager, Tullow Uganda. These changes will take effect from 1 January 2020,” said Tullow disclosed.
Tullow Oil Vs URA case loss
In July 2014, Tullow Oil’s woes took a new twist after losing a case to Uganda Revenue Authority.
In the Ruling, Irish –founded enterprise was ordered by a tax appeals tribunal to pay UGX 1.069Trn ($407m) to Uganda Revenue Authority (URA) as Capital Gains Tax that the tax body had levied on the oil company after it sold its interests in Uganda’s oil sector, valued at $2.9b, to China National Offshore Oil Corporation (CNOOC) and Total in 2012.