The deal allows Tullow Oil to increase its stake in the offshore DWT block by 7.7% for around $150m
UK-based Tullow Oil is set to increase its stake in Jubilee and TEN fields in Ghana after exercising its right of pre-emption regarding the sale of Occidental Petroleum’s interests in the fields to Kosmos Energy.
As a result of its acquisition of Anadarko WCTP announced last month, Tullow Oil has pre-emption rights in respect of the 11.05% stake within the offshore DWT Block indirectly bought by Kosmos Energy.
The deal will enable Tullow Oil to increase its stake in the offshore DWT block by 7.7% for around $150m, bringing its overall stake in the block to 54.8%.
It will enable the UK-based firm to increase its equity interest in the Jubilee field to 38.9%
The additional equity stakes are anticipated to add up to 10% to Tullow’s group production and generate more than $250m incremental free cash flow at $65/bbl for the company between 2022 and 2026, helping the firm to fast-track its debt reduction.
With an estimated post-tax NPV 10 valuation of $347m, the 7.7% additional equity is expected to increase Tullow’s net 2P reserves by around 21 million barrels of oil equivalent.
Tullow Oil CEO Rahul Dhir said: “This is a value accretive, self-funded opportunity for the group which will increase Tullow’s daily Group production by c.10% and generate additional cash flow to help accelerate debt reduction.
“Increasing our operated stakes in the Jubilee and TEN fields underscores our commitment to investing in and delivering our Ghana Value Maximisation Plan. This opportunity fits well with our strategy to focus on maximising value from our producing assets.”
Tullow Oil said that it will use existing resources to finance the deal to acquire participating interest in the DWT Block.
The closing of the transaction is subjected to agreements with Kosmos Energy/Anadarko WCTP, as well as receiving approval from the government of Ghana.
In February this year, Tullow Oil agreed to divest its oil-producing assets offshore Equatorial Guinea and the Dussafu asset in Gabonese waters to Panoro Energy for around $180m.