Tullow Oil & Uganda (old thread)

27th Jul '10 by doverbeach

47 comments 17513 reads

A thread for general stuff on Tullow's Ugandan assets: farm-outs, valuations, development options etc. THIS THREAD HAS NEW BEEN SUPERCEDED BY http://www.stockopedia.com/content/uganda-post-heritage-acquisition-45399/

Background info From Tullow's website:

Tullow holds interests in three licences on the Ugandan side of the Lake Albert Rift Basin - Block 1, Block 2 and Block 3A.

Since exploration drilling commenced in 2005, Tullow has had a near 100% success record discovering oil over a range of 150km. With over 700 mmbo of gross Contingent Resources discovered in the Lake Albert Rift Basin to date, the commercial threshold for development has been exceeded and has assigned a dedicated team to deliver a commercial development plan for the region. With many prospects still to be drilled, Tullow considers that further resources will be added in the coming years, with around 1.5 billion barrels still to be discovered.

An integrated team is now focused on short and long-term commercialisation options with first production, from extended well testing, potentially commencing as early as 2010 at Kasamene. Following this will be a phased development of the Kingfisher and Kasamene fields which could take production to tens of thousands of barrels of oil per day. Oil for local and regional energy and fuel requirements will be prioritised with export in the later phases of development when a full basin development with a potential pipeline could be considered.

Unlock with Email

Unlock with Google

Already have an account?
Login here

Norway grants Shs8 trillion in development aid to Uganda

July 20, 2009

Uganda Daily Monitor

The Norwegian Government has granted a total of 234 Million Kroner (Shs 8 trillion) to the Ugandan Government in support of development programmes. The grant is meant to supplement the Government’s 2009/10 budget and will focus on four priority areas; rural electrification, strengthening management of oil and gas, forestry and environment and meat export development...

Man Siarad

NPV/bbl Value($m) 50% Sale($m)

$3.00 1390 695
$3.50 1621 811
$4.00 1853 927
$4.50 2085 1042
$5.00 2316 1158

doverbeach

11th Oct '09

Tullow has opened a data room for farm out of Uganda assets. From Sunday Times today

Tullow Oil, another FTSE 100 oil explorer, has appointed Standard Chartered to sell half its stake in two oilfields in Uganda. Aidan Heavey, chief executive, said the company has already put together a list of about 10 companies that have prequalified for bidding. These are thought to include China National Petroleum Corporation, Sinopec, Total of France, Italy’s Eni, Korea National Oil Corporation, and Norway’s Statoil. The data room opens this week and Tullow is hoping to choose a buyer by the end of the year.

Analysts estimate that the company could pocket $1.5 billion (£938m) from the sale. More importantly, the deal will allow it to share the immense costs of developing the two oil fields in the remote region around Lake Albert in northwest Uganda.

...

Heavey said: “We and the Ugandans will be talking with the companies to see what they can bring to the table. It’s like the beginning of a long relationship, and this is like a prenuptial agreement.”

Thanks for this, db.

Scope for quite a lot of activity here, I think.

I was interested to see Statoil in the list - not one of the usual NOC candidates for overseas acquisitions, though they have recently been beefing up their presence in the UAE, which presumably is the regional head office.

Now, I wonder what the Norwegian Government might have been doing recently to strengthen its relations with Uganda in terms of development aid....

Ah!

http://www.financialtaskforce.org/2009/07/20/norway-grants-shs8-trillion-in-development-aid-to-uganda/

JPGH

some good analysis by xxnjr over on TMF http://boards.fool.co.uk/Message.asp?mid=11705444&sort=whole#11705456 on possible valuation for Tullows Ugandan stake.

According to my estimates/running tally TLW have discovered a net 463mmbo on a working interest basis [after allowing for 15% govt back in], which results in the following:-
NPV/bbl            Value($m)          50% Sale($m)     

$3.00                  1390                  695             
$3.50                  1621                  811
$4.00                  1853                  927
$4.50                  2085                 1042
$5.00                  2316                 1158

With regard to the in the ground valuation number that can be used, the Ugandan PSC terms are considered, by some, to be quite harsh given the initial entry position Tullow were at several years ago in a un(der)explored province. Not sure if the T&C's are in the public domain either so cant accuratly comment. I recall Tom Hickey, at an Oilbarrel presentation in 2007, saying that teh Ugandan gov. net take was/is approx. 70%, which seems reasonable enough when compared to T&C's elsewhere e.g. hate to harp on about Kurdistan but the gov. take there is in the region of >85%.

Developemnt costs fro thisonshore developement should also be reasonable enough as wells appear to be very productive. In field OPEX will be high though as wax prevention facilities will be needed. The main technical and political obstacle to large scale developement is the export pipeline needed to flow waxy crude, in meaningful quantities (>400 kbopd or 14 MMbo/yr), through Uganda/Kenya to a coastal export terminal. In addition there are rumblings to build what seems to be a much too big a local refinery. This potential white elephant would scare me a lot were Tullow to get involved in that type of project.

I am using NPV / bbl of $5 for Ugandan in the ground P50 contingent resource numbers and concur that $1.5 billion for a 50% sale seems plausible. As data rooms and bid have several months to do this should hopefully allow enough time to appraise the Butiaba (Block 1) in the next drilling campaign to add more resources and/or move some P10 material into the P50 categories and up the bid price further. As the "rules" for succesfull farm down/M&A are such that you need to consider leaving soemthing on the "table" for the next man, as a long term Tullow holder, I dont want to see them sell too cheaply either.

So maybe TLW can boost their net P50 share to approx 6 to 700 MMbo before agreeing the sale price. Also gives time for further POO forecasting / rises.

50% for $2billion....anyone?.....

davjo

Ugandan PSC terms

The raw figures I have are from Hardman's sale details from the RISC Report on Waraga/Mputa :-

The main fiscal terms of the PSA are summarised as follows:
• Royalties: Royalties of between 5%-12.5% of gross revenue apply on a sliding
scale related to production
• Cost recovery: Exploration, development and production costs are recoverable from
60% of gross oil revenues.
• Profit Oil: Contractor’s share of Profit Oil ranges between 35% and 60% on a
sliding scale related to actual production
• Tax rate: Between 25% and 45% of net profits

Dunno whether any export pipeline would benefit from the 60% Cost Oilelement.

WeeEck

14th Oct '09

Sabre (assagai) rattling between the two again

KAMPALA, Uganda (Dow Jones)--The Ugandan government is planning to move border markings at Mpondwe, on its western border with Congo in the oil-rich Lake Albert Valley, a senior Ugandan minister said Wednesday in the latest twist in the land dispute between the two countries.

https://trade.cityindexweb.com/flashASP/host/progs/news/DJNewsStory.asp?newsID=20091014T3277&

oilretire

9th Dec '09

Story that Uganda will tax the ENI/HOIL deal between 25 & 45%........

http://www.gfmag.com/latestnews/latest-news.html?newsid=3616866.0

But for TLW, it says they await formal notification of the deal before playing their hand - which could be this month.

Heritage is expected to officially inform Tullow Oil PLC (TLW.LN), its co-owner in the two Ugandan blocks, before the end of December. The deal will need the approval of both Uganda and Tullow Oil.

However, Brian Glover, Tullow Oil Ugandan country manager says that the company has already informed the government that it will "seriously" consider taking over Heritage's interest once it receives formal communication. That would scupper the anticipated deal with Eni.

15th Dec '09

More quotes on pre-emption rights and by the looks of things HOIL have yet to give TLW them formal notification.

Strongest indication yet (if the quotes are reported correctly) that TLW are keen to pre-empt.

http://af.reuters.com/article/ugandaNews/idAFLDE5BE26J20091215?rpc=401&feedType=RSS&feedName=ugandaNews&rpc=401&pageNumber=1&virtualBrandChannel=0

Tullow Oil Vice President Tim O'Hanlon called Eni's entry in Uganda's burgeoning petroleum industry unfortunate and told the paper on Tuesday that his company has the first right of refusal over any deal.

A spokesman for Tullow in London confirmed the comments, but noted that Tullow needs to see the terms and conditions of the deal before it decides whether to take any action.

"They have, under our agreement, to give us details of any deal they have entered. They have not,".........

"If they do and we can match the price (being offered for their Ugandan assets). We have a right of pre-emption. This means Tullow will acquire those assets... at the right price."

O'Hanlon also accused Heritage of short-circuiting a process that Tullow had begun of finding a suitable development partner..........

The government's Commissioner for the Petroleum Exploration and Production Department, Ernest Rubondo, told Reuters the government was aware of Tullow's intention to assert its right of refusal.

"Yes, Tullow has previously signalled to us of their intent to retain their partner's stake and we're watching. We'll discuss details when they come to us for approval of whichever firm is to take over their stake,"

Tullow Oil & Uganda (old thread)

Unlock the rest of this article with a 14 day trial

About the Author

Doverbeach

47 comments

Norway grants Shs8 trillion in development aid to Uganda

Unlock the metrics for all these stocks and more...

Unlock the metrics for all these stocks and more...