Anglo — Irish Tullow Oil Plc shareholders yesterday afternoon voted by 99 per cent majority to sell the company’s entire stake (33.33 per cent) in Uganda’s oil fields and the proposed East African Crude Oil Pipeline (EACOP). The transaction is expected to be completed in the coming months.
In a statement issued yesterday, Tullow indicated that 788,781,164 or 99.93 per cent of shareholders had voted yes, in approval of the sale, technically known as the farm down, to French oil giant Total E&P. Only 0.07 per cent voted against it.
The cash-strapped company announced its intention to sell its stake in April to raise Shs2.1 trillion ($575m) as the company seeks to reinvent itself, paving way for its exit from the Ugandan market after 16 years.
According to the terms of the deal, Total E&P will pay Tullow Shs2.1 trillion ($575m) for the stake, with Shs1.8 trillion ($500m) paid once the deal has been approved by government, and the balance of Shs760 billion ($209m) will be paid whenever the Final Investment Decision (FID) has been reached.
In addition, Total E&P is committed to pay a bonus payment to Tullow when commercial oil production starts in the future, and only if a barrel of brent crude–the global benchmark for oil–will be trading upwards Shs239,200 ($65) per barrel.
Both Tullow and Total E&P, however, maintained that the "transaction remains subject to a number of other conditions, including customary government approvals and the execution of a binding tax agreement with the Uganda Revenue Authority that reflects the agreed tax principles previously announced."
The Energy ministry Permanent Secretary, Mr Robert Kasande, yesterday said: "Government review of the various aspects of Tullow’s operations are nearly complete."
Currently, a team comprising officials from the Petroleum authority and the oil sector regulator, among others, is on ground until Saturday reviewing the company’s areas of operations before they are taken over by Total E&P.
Initially, in 2017 Tullow intended to sell only 21.57 per cent of its interests and remain with 10 per cent in non-operatorship capacity in each of the three exploration areas to Total E&P for $900m.
The transaction was structured in two ways; $200 million (Shs736b) in cash consisting of $100 million (Shs368b) on completion of the transaction and $50 million at both FID and first commercial oil, and another $700 million (Shs2.6 trillion) in deferred consideration which will be used by Tullow to fund the company’s share of the costs of the […]