Tullow Oil announced that CNOOC Uganda Limited (CNOOC) has informed both Tullow and Total that it will not pre-empt the sale of Tullow's assets in Uganda to Total.
Tullow announced that it had agreed the sale of its assets in Uganda to Total for US$575 million and that CNOOC had rights of pre-emption to acquire 50 per cent of these assets on the same terms and conditions as Total.
Tullow said that in a notice received on 26 May 2020, CNOOC informed Tullow and Total that it has elected not to exercise its pre-emption rights. Accordingly, there are no changes to the previously announced transaction or timeline and Tullow continues to expect the transaction to complete in the second half of 2020.
The deal will see Total acquire Tullow’s entire interests in Uganda Lake Albert development project including the East African Crude Oil Pipeline.
Tullow is currently the operator of Block 2. Total Uganda is currently operator of Block 1 and Block 1A and CNOOC Uganda Limited (CNOOC) is operator of Block 3A.
Total will pay Tullow $575 million, with an initial payment of $500 million at closing and $75 million when the partners take the Final Investment Decision to launch the project.
The transaction remains subject to a number of conditions, including approval by Tullow's shareholders, customary government and other approvals and the execution of a binding tax agreement with the Government of Uganda and the Uganda Revenue Authority that reflects the agreed tax principles previously announced. This tax agreement can now be progressed following CNOOC's decision not to pre-empt.