KAMPALA – CNOOC Uganda Limited (CNOOC) has informed both Tullow and Total that it will not pre-empt the sale of Tullow’s assets in Uganda to Total.
On 23 April 2020, Tullow announced that it had agreed the sale of its assets in Uganda to Total and that CNOOC had rights of pre-emption to acquire 50% of these assets on the same terms and conditions as Total. CNOOC has now informed Tullow and Total that it has elected not to exercise its pre-emption rights. Accordingly, there are no changes to the previously announced transaction or timeline and Tullow continues to expect the transaction to complete in the second half of 2020.
The transaction remains subject to a number of conditions, including approval by Tullow’s shareholders, customary government and other approvals and the execution of a binding tax agreement with the Government of Uganda and the Uganda Revenue Authority that reflects the agreed tax principles previously announced. Tullow will now look to progress the tax agreement following CNOOC’s decision not to pre-empt.
Tullow set out plans earlier this year to sell off $1 billion worth of assets. The Uganda agreement would represent a major step in this plan, although it is something of a climb-down. In January 2017, Tullow agreed to sell a 21.57% stake in Uganda to its partners for $900mn, which would have left it with 11.76%.
There are a number of conditions still to be completed on the Total-Tullow agreement and there can be no certainty that this deal will succeed where the previous one failed. Tullow cited the need for a binding tax agreement with the Ugandan government and the Uganda Revenue Authority (URA).