REG - Tullow Oil PLC Tullow Oil PLC - FP Tullow Oil PLC - NP - Tullow Pre-emption in Ghana

Tullow OilAnnouncement

11/11/2021 07:05

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RNS Number : 0719S  Tullow Oil PLC  11 November 2021

News Release

 

Tullow pre-emption of Deep Water Tano component of Kosmos Energy/Occidental
Petroleum Ghana transaction

 

11 November 2021 - Tullow Oil plc (Tullow) announces that it has exercised its
right of pre-emption related to the sale of Occidental Petroleum's interests
in the Jubilee and TEN fields in Ghana to Kosmos Energy.

 

Pre-emption summary

-       Tullow to pre-empt on Deep Water Tano (DWT) Block interest
indirectly acquired by Kosmos Energy

-       Post completion, it is anticipated that Tullow's equity
interests will increase to 38.9% in the Jubilee field and to 54.8% in the TEN
fields

-       The additional equity interests are expected to add c.10% to
daily Group production and the associated incremental cash flow will help to
accelerate Tullow's debt reduction

-       The consideration is expected to be c.$150 million (if
pre-emption by other Joint Venture (JV) Partners is fully exercised), which
will be subject to closing adjustments

-       Tullow will fund this transaction through existing resources

Rahul Dhir, CEO of Tullow Oil, commented today:

"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."

 

Assets being acquired

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 has exercised its right of
pre-emption over this participating interest in DWT and assuming all JV
Partners also fully exercise their pre-emption rights, this would increase
Tullow's share in the Block by 7.7% (to a total of 54.8%). This would in turn
increase Tullow's equity interests in the Jubilee and TEN fields to 38.9% and
54.8%, respectively.

 

Consideration

The consideration for the 7.7% increase in equity would be c.$150 million with
an economic effective date of 1 April 2021, subject to concluding definitive
agreements and closing adjustments. The purchase of the participating interest
in the DWT Block will be funded from Tullow's existing resources.

 

Strategic and financial impact

Increasing exposure to these assets is aligned with Tullow's strategy to focus
on its producing assets. The additional equity is expected to increase Group
daily production by c.10% and generate over $250 million incremental free cash
flow at $65/bbl for Tullow between 2022 and 2026, which will help to
accelerate debt reduction.

 

As of 30 June 2021, based on Tullow's reported Half Year 2021 Reserves Report,
the 7.7% additional equity would increase Tullow's net 2P reserves by
approximately 21 mmboe and has an estimated post-tax NPV 10 valuation of $347
million.

 

Next steps and approvals

Completion of the transaction remains subject to finalising definitive
agreements with Kosmos Energy/Anadarko WCTP Company and gaining approval from
the Government of Ghana consistent with the agreed Kosmos/Occidental
transaction. Tullow will update the market accordingly as these discussions
progress.

 

Further information

In the event that both Kosmos Energy Ghana HC and Petro SA do not pre-empt,
Tullow would pre-empt the entire participating interest which would increase
Tullow's equity in the DWT block by 11.05%. The consideration to be paid by
Tullow in this event would be c.$206 million, subject to closing adjustments.

 

Based on Tullow's Full Year 2020 financial accounts, the loss before tax
attributable to the acquired assets would be $30 million and based on Tullow's
interim results as 30 June 2021 the gross asset value of the acquired
interests would be $755 million. These figures have been extracted from the
Tullow Oil plc consolidated financial statements and pro-rated for an
additional equity interest of 11.05% in the DWT Block.

 

FOR FURTHER INFORMATION CONTACT:

 

 Tullow Oil plc            Murray Consultants

 (London)                  (Dublin)

  (+44 20 3249 9000)        (+353 1 498 0300)

 George Cazenove (Media)   Pat Walsh

Nicola Rogers

                         Joe Heron
 Matthew Evans

(Investors)

 

This announcement contains inside information for the purposes of Article 7 of
Regulation 2014/596/EU which is part of domestic UK law pursuant to the Market
Abuse (Amendment) (EU Exit) Regulations (SI 2019/310) ("UK MAR"). Upon the
publication of this announcement, this inside information (as defined in UK
MAR) is now considered to be in the public domain. This announcement is being
made on behalf of Tullow by Adam Holland, Company Secretary.

 

Notes to Editors

Tullow is an independent oil & gas, exploration and production group which
is quoted on the London, Irish and Ghanaian stock exchanges (symbol: TLW). The
Group has interests in over 40 exploration and production licences across 11
countries including Ghana where it operates the Jubilee and TEN fields. In
March 2021, Tullow committed to becoming Net Zero on its Scope 1 and 2
emissions by 2030.

Follow Tullow on:

Twitter: www.twitter.com/TullowOilplc (http://www.twitter.com/TullowOilplc)

YouTube: www.youtube.com/TullowOilplc (http://www.youtube.com/TullowOilplc)

Facebook: www.facebook.com/TullowOilplc (http://www.facebook.com/TullowOilplc)

LinkedIn: www.linkedin.com/company/Tullow-Oil
(http://www.linkedin.com/company/Tullow-Oil)

 

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