Tullow Oil plc (“Tullow”) announces that on Sunday, 17 January 2010, its subsidiary, Tullow Uganda Limited (“Tullow Uganda”), exercised its right of pre-emption in respect of the proposed sale by Heritage Oil & Gas Limited (“HOGL”) of its 50% interest in Blocks 1 and 3A in Uganda.
Pursuant to its right of pre-emption, Tullow Uganda will enter into a Sale and Purchase Agreement (“SPA”) with HOGL, a subsidiary of Heritage Oil plc (“Heritage”). On 18 December 2009, Heritage announced that the consideration for the transaction comprises US$1.35 billion cash and a further contingent, deferred consideration of either US$150 million 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 at a meeting scheduled for 3pm (GMT) on 25 January 2010 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 a significant amount of interest from major international and national oil companies. The process is now well advanced and potential partners are supportive of the Group's decision to pre-empt.
Commenting today, Aidan Heavey, Chief Executive, said:
“Over the last six years, Tullow and Heritage have invested over US$700 million 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.
“The pre-emption of the Heritage transaction, and completion of Tullow's farmdown process, is an excellent opportunity to deliver an accelerated basin-wide development plan best suited to Government needs and to optimise value for all stakeholders.”