Tullow sells Guyana assets after unsuccessful exploration activities
(WO) – Tullow Oil Plc has agreed to sell its total interest in Tullow Guyana B.V. (“TGBV”), which includes the Orinduik license in Guyana to Eco Guyana Oil and Gas (Barbados) Limited (“Eco”) in exchange for a combination of upfront cash and contingent consideration.
Tullow’s decision to exit the Orinduik license is in line with its strategy to focus on its high return production assets in Africa and infrastructure-led exploration around producing hubs and delivering its objective to unlock value in emerging basins. In 2019, Tullow drilled two exploration wells on the Orinduik license, which yielded uncommercial oil discoveries. Nonetheless, Tullow recognizes the material oil resource potential remaining in the Orinduik license and as such, the terms of the Transaction allow Tullow to retain exposure to any potential future success in the region.
The transaction includes $700,000 cash payment upon transfer of TGBV’s 60% equity and operatorship of the Orinduik license to Eco, to be paid to Tullow Overseas Holdings B.V. (“TOHBV") on completion of the Transaction.
Contingent consideration is payable to TOHBV, which is linked to a series of potential future milestones and triggered as follows:
- $4 million in the event of a commercial discovery
- $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.