Tullow Oil & Uganda: Post the Heritage Oil acquisition

Announcement from HOIL today that TLW are going after the tax in court.......

http://www.investegate.co.uk/Article.aspx?id=201104180700090...

.......announces that Heritage and its wholly owned subsidiary Heritage Oil & Gas Limited ("HOGL") have received Particulars of Claim filed in the High Court of Justice in England by Tullow Uganda Limited ("Tullow") seeking $313,447,500 for alleged breach of contract as a result of HOGL's and Heritage's refusal to reimburse Tullow in relation to a recent payment made by Tullow of $313,447,500 to the Uganda Revenue Agency ("URA").

Xx,
Am also at coal face. 70- 100 days or do it will be.

JPGH

Re: the 70 to 100 days, my question to TLW was..... "I'm kind of assuming things are progressing ok and the original guidance holds firm. Is that correct?

And TLW's response:-

"Correct, angus guidance unchanged
Chris Perry
Head of IR and Corporate Communications"

70 to 100 days it is. Possible result in June or even late May if all goes to plan.

xx

JPGH 4 months, surely not? Don't forget this is a deep water well and in the beginning progress is pretty rapid as it's water :-) This Roc Oil release gives an idea of how fast initial progress can be:-

http://www.rocoil.com.au/Investor-Centre/Announcements/2011/Drilling-Activity-Update.pdf

"Roc Oil (Mauritania) Company, a wholly owned subsidiary of ROC, advises that the Maersk Deliverer rig started drilling the Gharabi-1 exploration well at 19:10 hours (Mauritania time) on 7 January 2011. At 06:00 hours on 9 January (Mauritania time) the well was drilling ahead at a measured depth of 2,418 metres. The planned total depth of the well is approximately 4,880 metres and the well is located in a water depth of 1,791 metres."

Zaedyus was spud at least 27 days ago. It's entirely possible that they are past the half-way point already.

As Angus MCoss (Tullow Oil Exploration Director) Zaedyus will take 70 to 100 days.

http://www.bnamericas.com/news/oilandgas/tullow-pegs-zaedyus-drilling-window-at-70-100-days

I would expect news from early June, not including the sw10law.

bs

xx, Chris

Zaedyus is a deep well (6500m) and is expected to take 4 months to drill at average rates of approx 60 metres per day. AH was correct.

http://www.pennenergy.com/index/petroleum/display/3624865804/articles/pennenergy/petroleum/offshore/2011/03/tullow-drills_zaedyus.html

The GM-ES-1 well is located offshore Guyane some 50 kilometres from the boundary with Brazil. The ENSCO 8503 rig will drill the well, GM-ES-1, to a total depth of approximately 6500 meters subsea, with the well targeting one of several prospects in major undrilled Late Cretaceous deep water channel fan systems identified from the extensive 3D seismic survey acquired in 2009-10.

JPGH

Glad to hear it ;-)

I've e-mailed the other Chris (perry @Tullow) about this. He's out of office for a few days. If I get a response I'll post it here.

Hi xx,

In the pink, thanks (not literally :-))

There were 3 or 4 directors fielding the questions. I can't remember now, but I'd put money on you being right :-)

Hi Chris,

How's it going? Yeah, I know 120 days was mentioned on the CC. But surely that was Aidan Heavy and not AMcC? The way I interpreted that was AH got his wires slightly crossed with the Jaguar well in Guyana which is the 120 day well.

xx

In answer to a question during this week's conference call on Uganda, AMcC referred to zaedyus as a 120 day well.

I'm sure the analyst knew z wasn't offshore Uganda :-)

It's quite a long drill, TD 6400m - Water Depth approx 2000m = 4400m to be drilled. TLW are guiding 70 to 100 days, bit of a guess on their part, as this is the first UDW/Deep Well in that part of the French Guyane sub-basin. There could be some news as early as late May or June. The Ensco 8503 is new. Zaedyus will be the rig's first drill. There could be one or two teething problems. OTOH, the rig is state of the art and powerful.

xx

Somewhat off topic I know, but do any of the posters on here have an idea of the timescale for the exploration well Tullow are currently drilling in off-shore Guyane?

I can't see any details on the Tullow website. But I'm assuming a drill time of up to 4 months plus a while for results analysis, and so we might see some news around August/September.

Thanks davjo, that's an interesting article.

My expectation remains that unless HOIL & TLW settle the issue "out of court" ie, pre referal to arbitration, this will end up with the high court having to rule on the validity of that referal. Although I bought some HOIL during the dissapointment phase after they confessed that they had only found many trillions of cubic feet of gas, I have serious doubts about their position in the Ugandan CGT issue.

Thanks again,
Regards.

G’day Muckshifter

It may well be that the original terms of the PSA covered an exemption from "tax" changes (I've a feeling Davjo - specialist reader of PSAs - mentioned this some time ago), but that could be construed to mean that the rates of tax applicable to the income achieved while operating the PSA are exempt, rather than the tax we are now considering.

Good point. At issue really is what value the stabilisation clause in the PSA which effectively freezes the laws in force at the time of signing? There’s a rather interesting article covering all this here :-

Selling Oil Assets in Uganda and Ghana – A Taxing Problem
http://www.revenuewatch.org/news/news-article/ghana/selling-oil-assets-uganda-and-ghana-%E2%80%93-taxing-problem

Seems some Ugandan CGT legislation was in place at the time of the original PSA signing but a few changes relating to the petroleum sector made since fogs the issue over liability in respect of the stabilisation clause. I’ve long since felt that HOIL were on pretty safe ground but I’m not entirely sure now. They’ve possibly still got the edge but the outcome sounds as if it’ll surround a technical legal interpretation which could go either way?

No position at the mo

This Ugandan Tax situation still seems far from clear to me. I'm sure that Heritage's contention that arbitration hearings under the terms of the PSA are to be held in London is correct, but to me that simply means that disputes about the terms of the PSA will be settled in that manner.

It may well be that the original terms of the PSA covered an exemption from "tax" changes (I've a feeling Davjo - specialist reader of PSAs - mentioned this some time ago), but that could be construed to mean that the rates of tax applicable to the income achieved while operating the PSA are exempt, rather than the tax we are now considering.

The differing indications from Heritage and Tullow concerning "arbitration in London" and a "tax tribunal in Kampala" seem to me to support my expectation that the first task of a London arbitrator would be to decide on the validity of arbitration to resolve the issue, knowing that TLW / UG would (assuming they believe they have a case) seek to have that referal to arbitration procedure ruled invalid in the high court.

Interesting anyway, and no doubt highly lucrative for a bunch of lawyers unless HOIL & TLW decide to resolve the situation by negotiation.
Regards.

Re the above, Heritage however want their money, and are "reviewing their options", including commencing arbitration.

As previously announced, Heritage's position, based on comprehensive advice from leading tax experts in Uganda, the United Kingdom and North America, is that the sale of Heritage's Ugandan interests to Tullow, which completed in July 2010, is not taxable in Uganda. On 26 July 2010, when the sale completed and funds were received, Heritage deposited US$121.5 million with the Uganda Revenue Authority ("URA") and deposited US$283.4 million in an escrow account at Standard Chartered Bank in London.

Following the Announcement, Heritage is reviewing its options to resolve this tax dispute, including commencing arbitration proceedings to reclaim the monies deposited in escrow in London and on deposit with the URA, totalling US$404.9 million. The production sharing agreements for Blocks 1 and 3A state arbitration proceedings will be held in London.

http://www.investorcalendar.com/includes/PRNPressRelease.asp?ID=1912412

Uganda: Sale and Purchase Agreements signed between Tullow, CNOOC and Total for $2.9 billion

Tullow Oil has signed Sale and Purchase Agreements (SPAs) with CNOOC and Total in respect of the sale of a one third interest to each party of the interests Tullow holds in Exploration Areas 1, 2 and 3A in Uganda. Tullow will retain a one third interest. The terms of the transactions include a total cash consideration payable to Tullow of US$2.9 billion.

With the signing of these SPAs, a key condition of the Memorandum of Understanding (MoU) agreed between Tullow, the Government of Uganda (GoU) and the Uganda Revenue Authority (URA) on 15 March 2011, has been satisfied. The next step is for Tullow to make certain tax related payments to the GoU, on receipt of which all relevant consents become final and the other provisions of the MoU become effective.

Under the MoU, Tullow and its new Partners, CNOOC and Total, have been granted new licences over EA-1 and an onshore area of EA-3A and the partnership’s rights to develop the Kingfisher discovery have been confirmed. A clear plan for the resolution of tax disputes on the various asset sales has been agreed by the GoU, the URA and Tullow.

http://www.energy-pedia.com/article.aspx?articleid=144791&editionid=100631

Interesting.

Total has said it is renegotiating its Ugandan licences:

  LONDON (Dow Jones)--Total SA (TOT) is renegotiating its Ugandan licences to make sure they last for a long enough period to make up for lost time, the head of the French oil giant said Wednesday.

  The news comes after a dispute between the Ugandan government and Tullow Oil PLC's (TLW.LN) former partner, Heritage Oil PLC (HOIL.LN), halted exploration activity for six months, though Total said it is ready to begin oil exploration in Uganda.

  "The contract we signed is ready to go [but] since time has been lost during those discussions and negotiations we need to be careful [not to enter into] licences with too short a life," Total's Chairman and Chief Executive Christophe de Margerie said in press briefing in London Wednesday.

  Before the company pays for the licences, it wanted to be sure that it can carry out exploration activity for a "acceptable and a reasonable period of time," he added.

  Tullow expects to reach an agreement that will allow it to proceed with its plans to sell a share of its Uganda assets to Total and China National Offshore Oil Company (CEO) no later than a few weeks after the Ugandan elections on Feb. 18, the company's chief financial officer, Ian Springett, said in January.

  That deal has been delayed because of a dispute between the Ugandan government and Tullow's former partner, Heritage Oil PLC, over capital gains tax. Some Ugandan officials have said Tullow should pay the $283 million in capital gains tax the government says Heritage owes in order to get the deal moving again.

  Despite the delay in the deal, Total and CNOOC are expected to pay Tullow in excess of $1 billion for a share in the Ugandan assets.

 

Claims again about that tax dispute:

But the chairman Tullow Uganda Operations, Mr. Elly Karuhanga, said the tax dispute between the government and the oil exploration companies, has been resolved.

The article starts:

Tullow Oil has deferred Uganda's first oil production to 2012 citing infrastructure challenges, the long tax dispute that held back progress through last year, as well as the waxy nature of Uganda’s crude oil, although the heading has it that Uganda is doing the delaying.

Other points:

- pipeline from Eldoret to Kampala? Libyan firm given the contract before Uganda discovered commercial oil reserves, but there has been very little progress on the pipeline.

- Unlike Ghana, which began production on December 15, 2010 - ouch!

- Brian Glover, said Tullow's investment in the country will increase to about $10b over the next decade,

Tullow playing hardball.

http://www.busiweek.com/11/index.php?option=com_content&view=article&id=283:uganda-defers-oil-production-to-2012&catid=104:uganda&Itemid=1314

This Wikileak out today could be embarrassing for TLW. Might even prove tricky for relations with government Ministers during current negotiations? :-

http://www.ilmessaggero.it/articolo.php?id=130164&sez=HOME_NELMONDO

Italian to English translation

"The agreement between Eni and Heritage is apparently the result of corruption 'as the Vice-President for Africa of the British oil company Tullow, Tim ÒHanlon," identifying two Ugandan ministers "who had received the" benefit from the cartel "in a meeting with the U.S. ambassador in Kampala, Jerry P. Lanier, 14 December 2009, focuses on an understanding that the giant Eni was preparing to announce in Uganda. Wikileaks was announced. "The Tullow said that senior Ugandan government officials have been" compensated "for supporting the sale to rival the Italian company Eni. ÒHanlon has' identified in the security minister, Amama Mbabazi and that of energy, Hilary Oneka, such as those who have benefited from the purchase of the rights of Heritage Eni, "says the cable published by Wikileaks. "If Tullow's allegations are true - and we believe they are - then this is a critical time for Uganda's nascent oil sector," writes the American diplomat.

Uganda Says Tullow License Can't Be Renewed
KAMPALA Uganda (Dow Jones)-The oil exploration license for Uganda's block 3A, which was formerly licensed to London-listed Tullow Oil PLC (TLW.LN) and Heritage Oil PLC (HOIL.LN), isn't renewable under Ugandan laws, the head of Uganda's oil production and exploration department said Thursday.

Looks like its all resolved with TLW coughing up the taxes:

DJ Uganda Minister: Dispute With Tullow Oil, Heritage Oil Resolved

 

  NEW DELHI (Dow Jones)--A dispute between the Ugandan government, Heritage Oil Corp. (HGOCF) and Tullow Oil PLC (TUWOY) over the payment of capital gains tax has been resolved, Uganda's minister of energy for state, Simon D'Ujanga, said Wednesday.

  In July, Canada-based Heritage sold half of its stake in blocks 1 and 3A of the Lake Albert basin of Uganda to Tullow for up to $1.45 billion, but Heritage declined to pay a 30% capital gains tax on the transaction.

  U.K.-based Tullow has already paid $1 billion to Heritage for the purchase.

  A third of the $405 million in disputed tax has been paid to the Ugandan authorities, and the remainder is in an independently administered escrow account.

  "We just discussed it (the dispute) and it is resolved. Tullow is the one which is going to pay the taxes," the minister told reporters.

  He said the parties are now discussing Tullow's plan to bring in partners for developing the field, including a sale of stakes in the blocks to CNOOC Ltd. (0883.HK) and Total S.A. (TOT).

 

Snippit of news from Uganda

  KAMPALA, Uganda (Dow Jones)--Uganda's constitutional court Tuesday dismissed treason charges against the leader of the country's largest opposition party and his alleged accomplices, clearing the way for him to run for president in 2011. 

  The five-judge panel said Kizza Besigye and the 10 other suspects are unlikely to get a fair trial.

   Emerging from the courtroom, the opposition leader expressed relief, calling the ruling a "strong indictment" of the country's longtime ruler, President Yoweri Museveni. "This regime has abused the trust of the people and should be voted out of power," he told reporters.

   Besigye is expected to challenge Museveni in polls set for February 2011. Campaigning is expected to start in November.

   The opposition leader was arrested in 2005 upon his return from a self-imposed exile in South Africa. He was accused of plotting to take over the government by force. Political analysts described the charges as "trumped up" to prevent Besigye from running for president in 2006.

   His party, the Forum for Democratic Change, nominated him as its candidate despite his imprisonment, and he got 37% of the vote.

   Besigye has said he will review oil production sharing agreements between the government and oil exploration companies if he wins the election.

   Uganda has discovered at least 2 billion barrels of oil along its western border with Congo and the U.K.'s Tullow Oil PLC (TLW.LN) hopes to start production in the country next year.

 

Lake Albert related (spotted by Subsurface over on TMF...)

http://af.reuters.com/article/commoditiesNews/idAFLDE6901KL20101001

Tullow obtain court injunction in BVI against companies awarded Block I/II on DRC side of lake. No work allowed to commence until outcome. Hearing to start in mid Oct.

JPGH

Interesting story here on ENI - possibly a plant to keep the pressure on Tullow.?

http://allafrica.com/stories/201009131179.html

While the Italians who initially courted both Tullow and Heritage had receded into the background after their proposed buyout of heritage was scuttled by Tullow 's preemptive rights, they have recently bounced back.
The EastAfrican has learnt that Eni has renewed contracts with its local suppliers for another six months, suggesting that they have not given up on Uganda yet.
According to oil industry sources, Eni which has so far spent $15 million on its Uganda programme has opted to play a waiting game.
This is the first time the company is spending so much money on a programme in a country before it has secured any tangible assurances that they will get a production licence.
The Italians apparently have the upper hand however, because they are the only company to have put together a basin-wide development plan and feasibility studies.
This, coupled with Eni track record and financial resources are considered to be strong selling points to Uganda which is eager to bring its fields into the production phase.

More pressure from Musaveni .Looking a certainty that Tullow will have to cough up if they want to make any kind of  progess.

http://www.foxbusiness.com/markets/2010/09/12/uganda-president-vows-check-greed-oil-exploration-companies/

The Ugandan government will continue to check the "greed" of oil exploration companies operating in the country that want to sell their interests at exorbitant prices without paying taxes to the government, the Ugandan president said Saturday.

President Yoweri Museveni told delegates of the ruling National Resistance Movement Party that the so-called "oil curse" in oil-rich African countries has been created by the failure of African leaders to control the greed of Western oil exploration companies operating in Africa.

However, President Museveni said that Heritage's reluctance to pay the tax is due to greed that the government must check.

"...Heritage spent $130 million in exploration. When oil was found, they decided to sell their shares, for which they received $1.45 billion--more than ten times what they spent. We required them to pay us 30% of this as tax. They, however, refused to pay," he said, adding that the government would ensure that taxes on the transaction are paid.

A not very subliminal message here from the old charmer.

http://uk.reuters.com/article/idUKLDE68611520100907

The Ugandan government will consider British oil explorer Tullow Oil (TLW.L) favourably if it applies for a production license for the Kingfisher field in western Uganda, the energy minister said on Tuesday.

Hilary Onek told Reuters the government had not yet decided whether to allow Tullow to apply exclusively for the license or open the field to competition.

"We haven't yet sat down to determine when to invite bids for a license or whether Tullow should be allowed to apply exclusively or whether we need competition. I can't speculate on that," Onek said in a telephone interview.

Nice article from EdmondJ here outlining the issues.

http://www.iii.co.uk/articles/articledisplay.jsp?section=ShareDealing&article_id=10107950

Trouble is, if TLW and new partners pick up HOIL's CGT tab, they'd be creating a very dodgy precedent for themselves

Do they have any other choice though.?

I'd imagine most prospective/existing Tullow investors would like to see them exit Uganda completely and concentrate on Ghana etc.I get the distinct impression that ENI are Musaveni's /Oneks partners of choice in Uganda and wouldn't exactly tear their hair out if Tullow left.

Also, given the location of the bulk of Block 1 acreage (within confines of a pristine game reserve area) it is not surprising that this block has not been explored to the extent of Block 2 (or 3).

Lots of guff and wind emanating from Uganda from journalists, see some of the UK lot are also jumping aboard now they smell a bit of blood. I expect to see some heavy selling this week as market over reacts (SP hitting
A "settlement" of sorts will, in all probability, occur with partners sharing this fairly insignificant pain between them. A setback of sorts as this is a Heritage/UG Gov. issue with Tullow caught in middle.

SP will rebound when TLW pockets >$3 billion from farm down and gets the O&G developments with its new partners moving along.

No big deal.

JPGH

If you read the Ugandan press there seems to be an awful lot of anti Tullow rhetoric around and much support for the Goverments position.
I had a sense of how much pressure the Government is under watching a few You Tube excerpts a few months ago on the new oil tax laws -there are plenty of politicians around willing to suggest that the current Government might be soft in dealing with international oil companies.

Anyway according to this account Heavey can't even get to see Musaveni anymore.
In the past Tullow seems to have had some success in bypassing Onek.Not anymore apparently.

http://allafrica.com/stories/201008300070.html

August 10

Aidan Heavey, the founder and chief executive officer of Tullow, wrote to the President, saying: "The situation is completely frustrating."

He stated: "I am passionately committed to the development of African nations, particularly Uganda, but this project, in which we have invested over $2.5b with yet as much to spend on the part of Tullow, will not move forward without consistent and positive messages of support from all concerned."

Then he requested to have "an urgent meeting with you in Kampala at your earliest convenience so that I can be given an opportunity to explain to you more of the background to this potential very managing situation and jointly with you find a mutually acceptable way forward". He neither wrote nor copied the letter to Onek.

However, State House did not respond. The President did not also meet the Tullow delegation led by Paul McDade, Tullow's chief operations officer, who had come from London hoping to meet and "discuss" with the President.

August 18

In another desperate move, Heavey, reacted to the minister's decision by writing to the President seeking an appointment to meet him. "I have made plans to travel to Kampala and I will be at your command to meet any of your officials you think necessary. I believe there is a major misunderstanding currently in relations to the sale of the Heritage interest and the payment of the tax legally due to Uganda as a result of this sale.

"Your Excellency, I can fully understand your Government's frustration at the refusal of Heritage to pay this tax. I will do everything I can to make sure the Government's position is protected and I said, I will be available to meet any of your officials to see what else we can do and, if possible, I would appreciate the opportunity to meet with you," he pleaded.

He arrived in Kampala and despite pressure piled on the Governemnt, he failed to meet the President. The President has never minced his words and he has insisted: Heritage must pay all the taxes. Analysts said this stand showed that Uganda was demonstrating the ability to control and manage the nascent oil and gas industry.

News today from the East African seems intended to put Tullow under more pressure in view of the imminent renewal of their Block 3A licence.

http://www.theeastafrican.co.ke/news/Tullow%20loses%20money%20and%20rights%20as%20oil%20deal%20goes%20bust/-/2558/998626/-/item/1/-/i82apxz/-/index.html

Tullow loses money and rights as oil deal goes bust

The EastAfrican has learnt that Tullow was desperate to close the deal because it had not been completely honest with its shareholders. For months, it had been making positive statements about the Ugandan business, which pumped up its share price on the London Stock Exchange.

Such misrepresentations included data on oil finds that included finds by Heritage, which at the time did not belong to Tullow. A collapse of the transfer deal would expose this, threatening the $3.1 billion that has so far been spent by the company in Uganda.

Tullow’s $3.1 billion exposure in Uganda is made up as follows: The $1.1 billion Hardman buyout, $500 million exploration of block 2 and the $1.45 billion Heritage buyout. Block 3A expires on September 7 while Block 1 expires next year.

Questions are also emerging on how Tullow racked up such huge costs for its operations in Uganda.
While Heritage spent $150 million to explore 6,279 square kilometers, Tullow claims to have spent $500 million on a much smaller area.

Unless there are demonstrable geological differences to justify the costs, something is not right with Tullow’s costs, which are deductible from sales.

http://www.telegraph.co.uk/finance/comment/alistair-osborne/7968827/Tullow-trapped-between-a-hippo-and-a-Heritage-hard-man.html

More fool Tullow then for doing the deal. Not only is the Kingfisher exploration licence now up in the air – but the dispute is stopping Tullow farming out 30pc stakes in its newly acquired fields to France’s Total and China’s CNOOC.

He’d hate to admit it. But Heavey might have to conclude that Buckingham has proved himself far more calculating, clever and ruthless than him. Or, if you prefer, mercenary.

As if the loss of Kingfisher wasn't enough there are reports in the Sunday Times today that Tullow has been also ordered to stop work on a second license on Block 1 until the tax is paid in full which leaves them with very little wriggle room I would have thought.

More tax problems..? 

Government takes away Tullow oil licence

http://www.monitor.co.ug/News/National/-/688334/997778/-/x4jpjl/-/                   

Government has taken back a major oil field in western Uganda over a tax dispute, bringing Tullow Oil’s operations in the country to a standstill. The oil-rich Kingfisher field is part of block 3A that Tullow shared with Heritage Oil but which it acquired after buying out Heritage’s 50 per cent stake for $1.5billion.

Davy comment this morning.

http://www.davy.ie/Generic?page=MorningNews7

While this is an appraisal rather than exploration well, it still demonstrates the potential of the Ugandan acreage to add barrels. Tullow's estimate of total discovered oil in Uganda to date has increased from "over 800 million barrels" in March to 950m barrels now following the drilling of the Kasamene 3 and 3A, Nzizi-3, Nsoga-5 and now Ngiri-2 wells.

All of these wells have been appraisal wells; the focus will now shift more to exploration. The Mpyo-1 well is next to spud and, together with targets such as Jobi and Rii, we think there is potential to add in the order of hundreds of millions of barrels to the discovered volumes with the current drilling programme. There are currently two rigs in use, and a third is expected before the end of the year, so newsflow will be regular.

Can't/shouldn't really say too much on Tullow nowadays on public BB's (for obvious reasons).

Tullow genuinely do want to be more than a passanger in Uganda and will be an operator of some of the blocks to be sold to CNOOC/Total.

There are no exit plans for Uganda, just a farm down to share the risks/costs.

This also applies across their assets in Africa.

They are beefing up the Technical Team.

JPGH

TLW surely has to top (or come close to the top) lists of most attractive targets for the mega and super giant oilies out there given the materiality of their interests.

I agree.

I think the market reaction to the last three days' announcements has been surprisingly muted. Tullow described Owo as their most important well this year, the Ugandan impasse has been resolved with Tullow now having excellent partners and the Nzizi-2 is a very solid appraisal result which will help towards firming up the Ugandan reserves.

db

My only real concern with TLW is that they are stretching themselves so thin and the demands on the technical teams is surely huge at the moment.

Really cant see them getting involved in Ugandan development so anticipate an exit from there as more resources are proved up, thus freeing up cash (and time) to concentrate on the other assets.

That is, of course, if it is still around by then.

TLW surely has to top (or come close to the top) lists of most attractive targets for the mega and super giant oilies out there given the materiality of their interests. Personally Id love to see BP take a run at them after selling off the low impact assets and turning itself into a super explorer. Then again, Ive been up since 1am (again) and my mind is probably paying tricks on me.. ;-)

hi ee,

yes, I was late to the Tullow party myself ... and my biggest regret of 2008 was not putting a farm bet on them at £4.50 odd.

Not sure if you have seen this excerpt from Tullow's 2009 Annual report  (thanks to xxnjr on TMF for highlighting it)

We focus on three core play types and we leverage our capabilities in those plays across the world. The Group has 200 to 300 leads and prospects, covering all stages of evaluation from initial screening through to delivering commercial discoveries. Each of the core plays is proven to have first class potential and each comes with its particular value and challenges.

(1) Stratigraphic traps can have exceptional upside and often lie subtly within held acreage. We are developing proven expertise in this play and in particular in the vast potential that lies in the Equatorial Atlantic regions of West Africa and South America.

(2) Rift basins are a fundamentally rich setting for petroleum exploration and benefit from excellent source rocks and generally straightforward structural geology. Tullow has gained extensive expertise in this core play, mainly in Uganda.

(3) Salt basin Salt is a first class seal and salt tectonics form a rich diversity of Salt Basin trap types. Tullow’s seismic acquisition, processing and interpretation expertise in Salt Basins provides a tangible competitive advantage, which we are applying to our acreage in Mauritania and Senegal.

db

Tullow's "stunningly successful drilling record" continues today with success at Ngiri-2 an appraisal well in the Butiaba region of Block 1, on the border with Block 2, see here for map. So that is now 32 out of 33 wells in Uganda :)

The well was 1.7k from the Ngiri-1 well and found

over 40 metres of net oil bearing reservoir in two zones within an overall 131 metre gross oil bearing interval   ... Successful logging and sampling operations have confirmed the presence of moveable oil in two zones. The lower zone encountered an oil water contact while pressure data acquired within the upper zone indicates the possibility of a deeper contact than expected. Reservoir quality is also excellent, akin to the Kasamene field in Block 2, where a production rate of 3,500 bopd was achieved during testing in 2009.

The original Ngiri-1 well (then called Warthog-1) was uncertain about the nature of the hydrocarbons in the upper zone, so it's good to have them confimed as oil.

The rig now moves to Mpyo-1 in Block 1, the prospect previously known as Crocodile, for what is described as a 'material wildcat' well.

db