Tullow Oil sells West African assets for USD 180 million

Multinational oil and gas exploration company Tullow Oil has signed two separate sale and purchase agreements with Panoro Energy worth a total USD 180 million.

One of the agreements relates to the sale of Tullow Oil ’s assets in Equatorial Guinea (EG), while the other relates to an asset in Gabon.

London-headquartered and Oslo Stock Exchange-listed Panoro is the sole purchaser.

The EG transaction involves the disposal of Tullow’s entire interest in its EG assets via the sale of Tullow Equatorial Guinea Limited. The Gabon transaction involves the sale of 100% of Tullow’s interest in the Dussafu Marin Permit Exploration and Production Sharing contract in Gabon.

While the Dussafu deal does not require shareholder approval, the EG transaction does. Nonetheless, both agreements must receive approval from Panoro shareholders for a proposed equity fundraising for Panoro, so that it can part-finance the transactions.

The EG transaction is worth up to USD 105 million, and the Dussafu Transaction up to USD 70 million, with an extra USD 5 million to be paid by Panoro following the completion of both transactions.

The two deals are aligned with Tullow Oil’s strategy to focus on high-margin and self-funded production, and to generate a higher cash flow. The transactions will strengthen Tullow’s balance sheet and are value accretive.

It follows a review by the company of its portfolio of assets in 2019, after which it sold assets in Uganda to Total E&P Uganda for USD 575 million in 2020.

As a result of the most recent sales, Tullow Oil’s 2021 pre-financing cash flow is expected to increase by circa USD 0.1 billion.

Panoro’s two largest shareholders, Sundt and Kistefos, have also agreed to subscribe for new ordinary shares in Panoro, equating to a value of approximately USD 11.6 million.

In a statement, Tullow Oil’s CEO Rahul Dhir noted the positive impact of the deals on the company’s financials: “These are important, value accretive deals for Tullow that will have a positive effect on our financial position as we look to further reduce our net debt and continue constructive discussions with our creditors. These transactions are also in line with our strategy of investing our capital on cash-generative, high return investment opportunities in our core portfolio.”Discussing the significance of Tullow’s West African assets, Dhir said: “Our Equatorial Guinea assets have formed an important and stable part of our non-operated West Africa producing portfolio since 2004. We will be exiting Equatorial Guinea after many years of […]

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