Chinese Oil Company CNOOC Uganda Limited is acquiring half of the interests in exploration, recently bought by Total E&P Uganda from Tullow Oil.
On 9 January 2017, Tullow announced that it had agreed to farm-down 21.57% of its 33.33% interests in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total for a total consideration of $900 million (about Shs. 3.2 trillion).
Yesterday however, Tullow announced that it had been notified by CNOOC that it had exercised its preemption rights under the joint operating agreements between Tullow, Total and CNOOC to acquire 50% of the interests (worth about 1.6Trillion) being transferred to Total.
Preemptive rights imply in this case that CNOOC as a player, enjoys the privilege of deciding to purchase additional exploration interests before they are made available for purchase by Tullow.
Tullow announced today that CNOOC had agreed to complete the farm-down on the terms and conditions that were agreed between Tullow and Total (including as to the amount, structure and timing of the consideration payable to Tullow).
“Tullow will now work with Total and CNOOC to conclude definitive sale documentation in relation to the farm-down,” read part of a document released by Tullow yesterday.
Completion of the farm-down, they said, would be subject to certain conditions, including the approval of the Government of Uganda.
Once the farm-down has completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position.