Tullow has received the approval of Gabon government licence extensions increase in the value of resource base through the addition of c.5mmbbls net 2P reserves that will deliver c.100% 2P reserves replacement in Gabon this year.
This activity is in line with the Group’s strategy to focus on its high return production assets in Africa and unlock value through optimisation of its non-operated portfolio. The extensions reflect the future potential of the reserves and resources across the Gabonese assets and the longevity of the Tchatamba facilities as a core hub for Tullow.
In another development, Tullow’s has reiterated its decision to exit the Orinduik licence is in line with its strategy to focus on its high return production assets in Africa and infrastructure-led exploration around producing hubs and delivers its objective to unlock value in emerging basins. In 2019, Tullow drilled two exploration wells on the Orinduik licence which yielded uncommercial oil discoveries. Nonetheless, Tullow recognises the material oil resource potential remaining in the Orinduik licence and as such, the terms of the Transaction allow Tullow to retain exposure to any potential future success in the region.
Transaction summary:
US$700,000 cash payment upon transfer of TGBV’s 60% equity and operatorship of the Orinduik licence to Eco, to be paid to Tullow Overseas Holdings B.V. (“TOHBV“) on completion of the Transaction (the “Initial Consideration”).
Contingent consideration is payable to TOHBV, which is linked to a series of potential future milestones and triggered as follows:
* US$4 million in the event of a commercial discovery
* US$10 million payment upon the issuance of a production licence from the Government of Guyana
*Royalty payments on future production – 1.75% of the 60% working interest entitlement revenue net of capital expenditure and lifting costs.
*Transaction and payment of the Initial Consideration outlined above is subject to certain market-standard conditions precedent, including Government and JV approvals.
*Proceeds from this transaction will be put towards general corporate purposes.
- Completion is expected to occur in the second half of 2023.
“This transaction is in line with our strategy to optimise our portfolio through opportunities to unlock value from our emerging basin licences, whilst focusing our capital expenditure on our high return producing assets and growth opportunities around existing infrastructure.” Jean-Medard Madama, Director Exploration, Non-Operated Assets and Decommissioning, commented.
