(Tullow, 10.Aug.2023) — Tullow Oil Plc 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 in exchange for a combination of upfront cash and contingent consideration.
“This transaction is in line with our strategy to optimize our portfolio through opportunities to unlock value from our emerging basin licenses, whilst focusing our capital expenditure on our high return producing assets and growth opportunities around existing infrastructure,” said Tullow’s Jean-Medard Madama, Director Exploration, Non-Operated Assets and Decommissioning,
Tullow’s decision to exit the Orinduik license is in line with its strategy to focus on its high return production assets in Africa and infrastructure-led exploration around producing hubs and delivers its objective to unlock value in emerging basins. In 2019, Tullow drilled two exploration wells on the Orinduik license which yielded uncommercial oil discoveries. Nonetheless, Tullow recognizes the material oil resource potential remaining in the Orinduik license and as such, the terms of the transaction allow Tullow to retain exposure to any potential future success in the region.
Transaction summary:
- US$700,000 cash payment upon transfer of TGBV’s 60% equity and operatorship of the Orinduik license to Eco, to be paid to Tullow Overseas Holdings B.V. (TOHBV) on completion of the transaction.
- Contingent consideration is payable to TOHBV, which is linked to a series of potential future milestones and triggered as follows:
- US$4mn in the event of a commercial discovery
- US$10mn 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.
- Completion is expected to occur in the second half of 2023.
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