Tullow Oil seeks development partners for its Ugandan assets
TULLOW Oil, the Irish-founded oil explorer, said yesterday that it wants to bring in one or two partners to help with the estimated $5bn (€3.4bn) cost of developing its Ugandan assets.
The news came after Tullow appeared to derail Eni's attempt to gain a foothold in the east African nation. Tullow said it wanted to sell as much as half of three combined blocks in the Lake Albert region to one or two big oil companies.
"The Ugandans want to make sure that they have a number of companies involved in the energy sector," Tullow chief executive and founder Aidan Heavey said.
Tullow Oil exercised pre- emption rights on Sunday over fields being sold by Canada-based Heritage Oil to Italy-based Eni, a decision described by Mr Heavey as "pretty inevitable".
Tullow will submit a list of preferred partners, with speculation centred on Total and Exxon Mobil, according to Goodbody Stockbrokers, for approval by the Ugandan government in the first week of February.
"Speculation on the likely bidders continues to gravitate towards Exxon and Total as the leading candidates. Those candidates would appear to be fully informed, based on the statement that they approve of the pre-emption bid," Goodbody's Gerry Hennigan wrote yesterday.
Uganda's Energy Minister Hilary Onek backed Tullow's bid, even though the government was yet to officially receive the offer document.
"The deal is subject to government approval but we would be surprised if Tullow had not already received assurances ahead of this announcement," said Richard Rose, an analyst at Oriel Securities in London.
Tullow shares closed up 52.2c, or 3.5pc, to €15.51 in Dublin. The stock -- also listed in London, where the company has its headquarters -- doubled in value last year, which made Tullow one of the biggest companies on the Irish stock exchange. The development of Uganda's Lake Albert assets would require investment of more than $5bn over the next decade, Tullow said.
About 1.5 billion barrels of oil were yet to be discovered in the Lake Albert Rift Basin, according to Tullow estimates.
Tullow, which operates in 15 African states, plans to produce its first oil from the Kasamene field in Uganda this year, with output rising to at least 5,000 barrels a day in 2012 and then 150,000 barrels, according to estimates by McDade.