WEST AFRICA – Tullow Oil Plc TUWOY plans to divest its overall assets in the productive fields of Equatorial Guinea and the Dussafu Marin in Gabon on the west coast of Central Africa.
Tullow Oil signed the individual sale and purchase agreements with Oslo-listed Panoro Energy ASA (or Panoro) for all of its holdings in the Equatorial Guinea and Dussafu assets.
Notably, Panoro will have a 14.25% ownership interest in the exploratory Block G offshore Equatorial Guinea and an extra 10% interest in the BW Energy-operated Dussafu Marin Permit, wherein the upstream company already has an existing interest of 7.5%.
However, the Equatorial Guinea transaction is subject to the approval of Tullow Oil’s shareholders.
The exploratory block G is operated by Trident Energyand includes six producing offshore oil fields through the Ceiba and Okume fields, with a total production of 4,500 barrels of oil per day (bo/d) since 2020.
It is expected to achieve increased production of 8,000 bo/d by 2023-25, induced by facility upgrades, well workovers, perforation of behind pipe zones and infill drillings.
Total transaction consideration involves about US$180 million, of which US$105 million is for the Equatorial Guinea transaction and up to US$70 million for the Dussafu assets deal. Moreover, upon the completion of the transactions, an additional US$5 million consideration is to be paid to Tullow Oil.
Per the terms of the deal, Panoro will initially pay about US$140 million in cash along with a choice to pay an additional remuneration of up to US$40 million on the basis of oil prices and asset efficiency.
Notably, the agreements are in line with Tullow Oil’s plans to place emphasis on high-margin and self-financed production, and generate higher cash flow in order to mitigate its US$2.4-billion debt.
Tullow Oil mentioned that it will use the net proceeds from the transactions to bolster the company’s balance sheet as it aims to reduce its net debt and exploit its resources on high-yielding investment opportunities. Both deals are expected to complete in early 2021.
Headquartered in London, U.K., Tullow Oil is a hydrocarbon producer and explorer with the main focus on Africa.
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