London (Bloomberg) – Tullow Oil and Total are process to sell part of their stakes in oil discoveries in Kenya. According to familiar source, the French energy giant is planning to sell half of its 25% stake in the fields, said one of the people. Tullow said last year that it planned to reduce its holding to 30% from 50%.
The companies are believed to have hired Natixis SA to assist with the sale. But the Paris-based investment bank declined to comment on the above transaction. Tullow’s sale is assumed to be part of its recent repositioning of its operations and assets intended to reduce the business activities to cut costs. Available information indicates that Shares of the company slumped 64% last year owing to unsatisfactory exploration results in South America and lower-than-expected production from its main oil asset in Ghana. Chief Executive Officer Paul McDade and exploration chief Angus McCoss left the company in December. The oil discoveries in eastern Kenya are still on preminery stages and are yet be available to the crude oil market. A plan for initial development was suspended in the fourth quarter after severe weather damaged roads, and will remain so until they can be repaired, Accordimg to Tullow, full exploitation of the resources would require a $1.1 billion pipeline to the coast of East Africa.
Tullow’s sale plan is not expected to delay investment in production or the proposed pipeline installations as The Kenyan government is aware of this recent development, Petroleum Principal Secretary Andrew Kamau asserted.
Tullow faces a similar challenge in monetizing more than a billion barrels of oil resources in eastern Uganda, which remain locked deep underground despite being discovered about a decade ago. Work on a $3.5 billion pipeline to deliver that oil to international markets is on hold after the company’s plan to sell a 22% stake in those assets to Total fell apart last year.