Tullow Oil is set to increase its stake in two offshore fields in Ghana, with the company having exercised its pre-emption rights to acquire Occidental Petroleum’s interest in the Deepwater Tano (DWT) block.
Tullow is expected to increase its share in the block – home to the Jubilee and TEN fields – by 7.7% through the transaction, which carries a price tag of $150 million.
The London Stock Exchange-listed Tullow holds pre-emption rights regarding the 11.05% existing participating interest within the offshore DWT Block, which was indirectly acquired by Kosmos Energy when it acquired Anadarko WCTP Company. Pending approval by the Ghanaian Government, it is expected that Tullow’s equity interest will increase to 38.9% in the Jubilee field and 54.8% in the TEN field.
With the additional equity, Tullow could increase production by 10%, driving incremental cash flow by $250 million. The sale will be financed from the company’s current assets. The transaction is governed by an operating agreement signed between Tullow and Petro SA for pre-emption rights, an upstream sector agreement giving priority of the first refusal on any sale of interest to its major players.
“Increasing our operated stakes in the Jubilee and TEN fields underscores our commitment to investing in and delivering our Ghana value maximization plan. This opportunity fits well with our strategy to focus on maximizing value from our producing assets. We look forward to constructive conversations with our JV Partners and the Government of Ghana as we finalize the transaction,” stated Rahul Dhir, CEO of Tullow Oil, in a press statement.
In mid-October, Kosmos Energy and the Ghana National Petroleum Corporation (GNPC) expressed their interest to acquire a share in the Jubilee and TEN oilfields, promising to pay $550 million and $200, respectively, which would have seen Kosmos increase its stake to 18% in Jubilee and 11% in TEN.
Tullow’s execution of pre-emption to acquire Occidental’s share at the Jubilee and TEN fields will reduce Kosmos Energy’s share by 3.8% in Jubilee and 8.3% in TEN. However, the interest will not affect GNPC’s stake in both of these fields, and will instead increase it to 13.64% and 10%, respectively.