Tullow Oil (LON:TLW) completed the $1.35 billion acquisition of the 50 percent interest in Block 1 and 3a in Uganda from Heritage Oil & Gas (LON:HOIL), bringing Tullow’s interest in the blocks to 100 percent.
The transaction also included an additional $100 million paid by Tullow for final settlement of a potential contractual dispute. The government of Uganda is retaining $405 million of the transaction, and Heritage is receiving $1.045 billion.
All conditions of the purchase have been met, and Tullow now intends to farm-out two-thirds of its interest in Blocks 1, 2 and 3A in the Lake Albert Rift Basin of Uganda to CNOOC (NYSE:CEO) and Total (NYSE:TOT).
The partners will help Tullow develop the Ugandan assets, including the construction of downstream facilities, such as a refinery and 1,200-kilometer oil export pipeline.
"This is a major step forward for Tullow and the Ugandan oil industry,” said Aidan Heavey, chief executive of Tullow. “We now look forward to signing the farmdown agreements with CNOOC and Total in the coming weeks and commence work with them on an accelerated basin-wide development plan that is expected to deliver production well in excess of 200,000 bopd from the Albert Rift Basin."
Both Heritage and Tullow saw a jump on the London Stock Exchange with the completion of the transaction.
