The total consideration for the transaction is £210 million, payable in cash on completion and Eni will also assume Tullow’s share of all associated abandonment liabilities. At 31 December 2007, net booked Commercial Reserves associated with the Hewett Unit totalled 10 Bcf and current production from the Hewett complex is approximately 12 mmscfd net to Tullow’s interest.
The Memorandum of Understanding forms the basis for definitive sale and purchase documentation which will be signed over the coming weeks. Tullow expects the transaction to complete by the end of 2008, once relevant approvals have been obtained. Eni is an existing partner in the Hewett Unit and the acquisition of Tullow's stake will raise Eni’s total ownership in the Unit to an 89% operated interest.
The Southern North Sea gas business remains a core Tullow asset. Recent portfolio adjustments leave the company better placed to add significant value and increase its already significant position in the basin. Thames area fields will continue to export gas via the Bacton terminal.
Commenting today, Aidan Heavey, Chief Executive of Tullow said:
"The sale of Hewett completes the restructuring of Tullow’s Southern North Sea interests and will free up capital for further investment in the region and across the Group. Today's transaction brings total 2008 portfolio management proceeds to approximately US$1 billion and leaves Tullow ideally placed to fund the major growth anticipated over the coming years.”