Pursuant to its pre-emption right, Tullow Uganda will enter into a Sale and Purchase Agreement (SPA) with HOGL, a subsidiary of Heritage Oil (Heritage). On December 18, 2009, Heritage said that the consideration for the transaction comprises $1.35bn cash and a further contingent, deferred consideration of either $150m cash or an interest in a mutually agreed producing oil field independently valued at a similar amount.
A syndicate of Tullow’s core relationship banks has provided the banking facilities required to enable Tullow to exercise its right of pre-emption. Completion of the SPA is subject to certain conditions, which include approval by Heritage shareholders and receipt of necessary consents from the Ugandan government.
In parallel with exercising its pre-emption right, Tullow has been running a transparent farmout process, which has attracted an amount of interest from various oil companies. The process is now well advanced and potential partners are supportive of the group’s decision to pre-empt.
Aidan Heavey, chief executive of Tullow, said: “Over the last six years, Tullow and Heritage have invested over $700m in the Lake Albert Rift basin in drilling 27 wells to prove up over 700 million barrels of oil and identify over 1.5 billion barrels of potential yet to be explored.
“Tullow is committed to retaining a material stake in Uganda and to continue to invest for the long term. As we enter the development phase we are working closely with the Ugandan government to introduce a mutually beneficial partner with downstream expertise who is aligned with this long term approach.”
