Tullow Oil exercises pre-emption rights on sale of Occidental Petroleum’s stake in Jubilee and TEN fields
Tullow Oil has decided to boost its stakes in the Jubilee and TEN oil fields by exercising its pre-emption rights on Kosmos Energy’s $550-million deal to acquire part of Occidental Petroleum’s interest in the Deepwater Tano (DWT) block, which is governed by a joint operating agreement and under which Tullow Oil has pre-emption rights.
As per the DWT Joint Operating Agreement (JOA), Tullow has pre-emption rights in respect of the 11.05% participating interest within the offshore DWT Block acquired by Kosmos Energy as a result of its acquisition of Anadarko WCTP Company announced on 13 October 2021.
Tullow Oil in a statement has noted that the exercise of its pre-emption rights is subject to finalising definitive agreements with Kosmos/Oxy and requires approval from state-owned Ghana National Petroleum Corporation (GNPC) and Ghana’s Ministry of Energy.
If completed, Kosmos’ ultimate interest in Jubilee would be reduced by 3.8% to 38.3%, which would see it retain about 80% of the originally acquired interest.
For TEN, Kosmos said its stake would fall 8.3% to 19.8% and would see it keep hold of just 25% of the originally acquired interest.
As a result of these pre-emptions, Tullow would be boosting its holding in DWT by 7.7% to 54.8% for $150 million.
This would in turn increase Tullow’s equity interests in Jubilee and TEN to 38.9% and 54.8%, respectively.
Commenting on Tullow Oil exercising its pre-emption rights, CEO of Tullow Oil, Rahul Dhir stated “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 maximizing value from our producing assets. We look forward to constructive conversations with our JV Partners and the Government of Ghana as we finalise the transaction.”
Background
Occidental Petroleum is reportedly said to have sold its 7 percent stake in the TEN and Jubilee oil fields to American upstream firm, Kosmos Energy.
According to sources, the sale of the shares by Occidental to Kosmos Energy was completed Wednesday, October 13.
Kosmos and GNPC struck a deal to acquire Occidental Petroleum’s DWT interests, paying $550 million and $200 million, respectively.
This deal would have seen Kosmos gaining an additional 18% interest in Jubilee and an extra 11% in TEN.
At the time of the deal, Kosmos said if pre-emption rights are fully exercised, this could reduce its ultimate interest in Jubilee by 3.8% to 38.3%, and in TEN by 8.3% to 19.8%.
Tullow’s pre-emption will not affect the Ghanaian player’s purchase of part of Oxy’s interest which means GNPC respective stakes in Jubilee and TEN will still increase to 13.64% and 10%.
