Tullow may buy Heritage’s Ugandan assets
Tullow Oil is "seriously considering" the purchase of Heritage Oil's Ugandan assets, scuppering an agreed $1.5bn deal by Eni SpA.
Tullow and Heritage are equal partners in Blocks 1 and 3A in Uganda’s Lake Albert. Eni, Italy’s biggest energy company, said November 23 it had signed a letter of intent with Heritage to buy its share.
Tullow is interested in acquiring Heritage’s interests and bringing in partners to help develop the fields.
“We would consider exercising pre-emption rights and, in the event that was successful, we would then go through a farm out for all the assets,” Brian Glover, Tullow’s manager for Uganda, said in a phone interview today. “We see Uganda as one of our key countries for future investment.”
Tullow’s intervention may thwart Eni’s efforts to build up its reserves and make up for output cuts from disruptions in Nigeria.
Around 1.5 billion barrels are still to be discovered in the Lake Albert Rift Basin, according to Tullow estimates. Uganda’s government would have to approve any deal, Glover said.
Heritage Oil, a UK producer operating in the Middle East as well as Africa, surged as much as 4.6pc in London trading today on speculation its assets may fetch a higher price than Eni had offered.
The shares fell 4.7pc on the day Eni announced the deal, as analysts including Marc Kofler at Citigroup Isaid the sale price undervalued the potential of the Lake Albert assets.
Build pipeline
Heritage has been seeking investors to help build a pipeline from Uganda to the coast of Kenya to export crude from projects with Tullow.
The latter is also marketing its assets in Uganda’s Lake Albert and said in October that Uganda had approved an initial list of companies interested in bidding for stakes. It expects to announce a partner early next year.
“We are not in talks with Eni about our farm-out, not at all,” Glover said, dismissing speculation that the Italian company was among companies that prequalified for bidding.
Eni is “not interested” in bidding for a stake in Tullow’s Ugandan assets, Chief Executive Officer Paolo Scaroni said last week.
Heritage Oil’s Chief Financial Officer Paul Atherton wasn’t immediately available for comment today. An Eni spokesman declined to comment.
