REG - Tullow Oil PLC - Tullow signs asset swap agreement with Perenco

Tullow OilAnnouncement

28/04/2023 07:00

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RNS Number : 7841X  Tullow Oil PLC  28 April 2023

TULLOW OIL PLC

 

Tullow signs asset swap agreement with Perenco to optimise Gabon portfolio

28 April 2023 - Tullow Oil plc (Tullow) is pleased to announce that, via its
subsidiary, Tullow Oil Gabon S.A. (Tullow Gabon), it has signed an asset swap
agreement with Perenco Oil and Gas Gabon S.A. (Perenco). This is intended to
optimise Tullow's equity ownership across key fields in Gabon and will be
achieved through a cashless asset swap involving the proposed exchange of
participating interests held by both parties in certain licences in Gabon (the
Transaction).

Transaction Highlights

·      Simplifies and equalises Tullow's equity ownership across key
fields in Gabon, creating better alignment between the participating interest
partners and streamlining processes.

·      Enables Tullow to leverage its technical skills and focus on more
material positions in key fields and places the Tchatamba facilities as a core
hub for Tullow.

·      Achieves an improved portfolio balance between discovered
resources and appraisal and exploration assets, with clear opportunities to
maximise the value of the assets, in line with the Group's infrastructure-led
exploration (ILX) growth strategy.

·      Provides access to future growth through Tullow's interest in the
DE8 licence where several ILX opportunities have been identified that could be
tied into existing Tchatamba facilities.

·      Assignment and transfer by Tullow Gabon of its existing
percentage participating interests in the Limande, Turnix, Moba and Oba assets
and part of its existing percentage of the Simba assets to Perenco.

·      Assignment and transfer by Perenco of part of its existing
percentage participating interests in each of the Kowe (Tchatamba) and DE8
assets to Tullow Gabon, resulting in post-completion holdings of 40%*for
Tullow Gabon (see table below).

·      Tullow's 2023 Group production guidance of 58,000 to 64,000 bopd
and cash flow guidance of c.$200 million at $100/bbl remains unchanged.

·      Nil consideration transaction with no impact on Tullow's
liquidity headroom.

·      The Transaction is subject to certain market-standard conditions
precedent, including customary government and regulatory approvals.

·      Completion of the Transaction is expected by the end of 2023 with
an economic date of 1 February 2023.

 

Rahul Dhir, Chief Executive Officer, Tullow Oil plc, commented today:
"This deal is an example of Tullow's strategy in action as we continue to take
proactive steps to optimise our portfolio to focus on high return producing
assets and growth opportunities around existing infrastructure. Our Gabon
assets are a valuable and important part of our asset base, and this
transaction enhances our exposure to preferred fields. We look forward to
working closely with our Partner to maximise their full potential."

 

CONTACTS
 Tullow Oil plc       Camarco

 (London)             (London)

 (+44 20 3249 9000)   (+44 20 3781 9244)

 Nicola Rogers        Billy Clegg

 Matthew Evans        Georgia Edmonds

                      Rebecca Waterworth

 

Transaction Structure and Rationale

Tullow's wholly-owned subsidiary, Tullow Oil Gabon S.A., has signed an asset
swap agreement with Perenco Oil and Gas Gabon S.A. (the Asset Swap Agreement),
pursuant to which each of the parties thereto has agreed to assign and
transfer certain existing participating interests held by it in specified
Gabonese assets to the other in exchange for the assignment and transfer of
certain participating interests to it in return, with an economic date of 1
February 2023.

Under the Asset Swap Agreement, Tullow Gabon has agreed to assign and transfer
certain of its existing participating interests, at the date of the Asset Swap
Agreement, in respect of the Limande, Turnix, Moba, Oba and Simba assets (the
Tullow Transferred Interests) to Perenco in exchange for the assignment and
transfer by Perenco of certain of its existing participating interests, at the
date of the Asset Swap Agreement, in respect of the Kowe and DE8 assets (the
Perenco Transferred Interests) to Tullow (the Tullow Transferred Interests and
the Perenco Transferred Interests together, the Transferred Interests).

The Transaction is aligned with Tullow's strategy of maximising the value of
our key producing assets and our Infrastructure-led exploration (ILX) growth
strategy of low-risk exploration and appraisal around existing infrastructure.

The rationale for the Transaction is the simplification of Tullow's equity
ownership across key fields in Gabon, creating better alignment between the
participating interest partners and streamlining processes such as budgeting,
cost management and capital allocation. The revised portfolio of assets will
enable Tullow to leverage its technical skills and focus on more material
positions in key fields.

The Transaction will also achieve an improved balance between discovered
resources, appraisal and exploration through the following:

·      Providing Tullow with a stronger position in the Kowe licence
that contains the Tchatamba infrastructure which will support potential future
developments including the recent Tchatamba TCTS-B14 ILX (Wamba) discovery, as
well as the DE8 and Simba fields.

·      Maintaining a strong position in the Simba licence where several
low-risk and compelling ILX investment options adjacent to infrastructure have
been high-graded for near-term drilling programmes.

·      Provides Tullow with greater access to future growth prospects
through an increased stake in the DE8 licence where appraisal drilling on the
Akoum B discovery is currently under way, with potential to deliver oil
production through Tchatamba infrastructure before the end of 2023. In
addition, several ILX opportunities, have been identified for future drilling
programmes.

An associated outcome of the Transaction is that production from Tullow's
retained assets will be entirely Rabi light blend crude following the disposal
of Limande and Turnix fields (both of which are Mandji blend).

The exchange of the Transferred Interests as between the parties will be
deemed for all purposes to be made with effect from the economic date. Due to
the neutrality of the Transaction, no additional consideration is payable by
either party in respect thereof. The Asset Swap Agreement includes provisions
to ensure the neutrality of the Transaction via cash adjustments for the
period between signing and completion.

Subject to the satisfaction of certain market standard conditions precedent,
including customary governmental and regulatory approvals, the Transaction is
expected to complete by the end of 2023.

Information on the Transferred Interests

·      Proposed changes to Tullow's equity ownership by field:

 Field             Current  Post-Transaction
 Kowe (Tchatamba)  25.0%    40.0%
 DE8               20.0%*   40.0%*
 Simba             57.5%    40.0%
 Limande           40.0%    0
 Turnix            27.5%    0
 Moba              24.3%    0
 Oba               10.0%    0

*Tullow Gabon signed a SPA with Perenco Gabon for a 20% equity interest in the DE8 licence in the first quarter of 2023.The increase to 40% equity interest is subject to the closing the initial DE8 SPA.

 

Under the UK Listing Rules, the Transaction is classified as a Class 2
transaction and is therefore not conditional on the approval of Tullow's
shareholders.

Although this is a cashless asset swap and therefore represents a neutral
transaction for both parties, the Class 2 classification of the Transaction
requires Tullow to state the value of the gross assets and profits
attributable to the assets, which are the subject of the Transaction.  On 31
December 2022, the aggregated gross asset value attributable to the equity
interest of the assets subject to the Transaction amounted to $120 million, as
per Tullow's 2022 Annual Report and Accounts.  The aggregated value of net
pre-tax profit attributable to the equity interest of the assets subject to
the Transaction amounted to $115 million for the year ended 31 December 2022,
as per Tullow's 2022 Annual Report and Accounts. As DE8 is not a producing
licence, Tullow has assumed no net pre-tax profits for the purpose of this
disclosure.

 

Notes to editors

Tullow is an independent oil & gas, exploration and production group which
is quoted on the London and Ghanaian stock exchanges (symbol: TLW) and is a
constituent of the FTSE250 index. The Group has interests in over 30
exploration and production licences across eight countries. In March 2021,
Tullow committed to becoming Net Zero on its Scope 1 and 2 emissions by 2030.
For further information, please refer to our website at www.tullowoil.com
(http://www.tullowoil.com/) .

Follow Tullow on:

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

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as at the date of such statement and, other than as may be required by the
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Exchange or applicable law (including as may be required by the UK Listing
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intended to express any future trends or indications of future performance,
unless expressed as such, and should only be viewed as historical data.

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