Tullow pre-empts Occidental’s sale of stakes in two Ghana fields to Kosmos
As part of its strategy to maximise value from the producing assets, Tullow Oil has exercised its right of pre-emption related to the sale of Occidental Petroleum’s interests in the Jubilee and TEN fields in Ghana to Kosmos Energy.
Occidental agreed to sell its interests in the Jubilee and TEN fields for $750 million to Kosmos Energy ($550 million) and Ghana National Petroleum Corporation (GNPC) ($200 million) in mid-October 2021.
When it comes to Kosmos’ part of the deal, it was supposed to increase Kosmos’ interests in Jubilee to 42.1 per cent and in TEN to 28.1 per cent. However, it was subject to a 30-day pre-emption period.
The Jubilee field straddles both the West Cape Three Points and Deepwater Tano (DWT) blocks in the Tano Basin offshore Ghana. The first production from the Jubilee field came in late 2010 and from Tweneboa, Enyenra, and Ntomme (TEN) in 2016.
Under the DWT Joint Operating Agreement (JOA), Tullow has pre-emption rights in respect of the 11.05 per cent participating interest within the offshore DWT Block acquired by Kosmos Energy as a result of its acquisition of Anadarko WCTP Company on 13 October 2021.
Tullow has exercised its right of pre-emption over this participating interest in DWT and assuming all JV Partners also fully exercise their pre-emption rights, this would increase Tullow’s share in the Block by 7.7 per cent (to a total of 54.8 per cent). This would in turn increase Tullow’s equity interests in the Jubilee and TEN fields to 38.9 per cent and 54.8 per cent, respectively.
The consideration for the 7.7 per cent increase in equity would be c.$150 million with an economic effective date of 1 April 2021, subject to concluding definitive agreements and closing adjustments. The purchase of the participating interest in the DWT Block will be funded from Tullow’s existing resources.
Rahul Dhir, Chief Executive Officer of Tullow Oil plc, commented: “This is a value accretive, self-funded opportunity for the group which will increase Tullow’s daily group production by c.10 per cent and generate additional cash flow to help accelerate debt reduction.”
Dhir also added that this deal fits well with the company’s strategy to focus on maximising value from producing assets.
Tullow noted that the completion of the transaction remains subject to finalising definitive agreements with Kosmos Energy/Anadarko WCTP Company and gaining approval from the Government of Ghana consistent with the agreed Kosmos/Occidental transaction.
In the event that both Kosmos Energy Ghana HC and Petro SA do not pre-empt, Tullow would pre-empt the entire participating interest which would increase Tullow’s equity in the DWT block by 11.05 per cent. The consideration to be paid by Tullow in this event would be c.$206 million, subject to closing adjustments.
As reported earlier this week, Tullow secured the first Ghanaian-owned and Ghanaian-flagged marine vessel for the support of its offshore oil and gas industry activities in Ghana.