Tullow shareholders to vote on Uganda sale
Tullow, in April, announced the sale of its remaining 33.33 per cent stake in Uganda to French oil giant Total E&P to raise $575m (about Shs2.1 trillion), amid the company’s financial doldrums. FILE PHOTO
What you need to know:
- Cnooc’s decision not to pre-empt makes validation of the deal even much easier, giving Total E&P majority shareholding of 66.66 per cent, and Cnooc 33 per cent in each of the Exploration Areas—EA, 2 and 3—upstream. But it also means more headache in the midstream, on the proposed crude oil export pipeline, hence Final Investment Decision will take a bit longer.
- Last year, Total E&P, the lead coordinator on the pipeline, had frozen all activities amidst the bad blood with government, but officials are now in the process of resuming negotiations to conclude the Host Government Agreement.
The Anglo-Irish Tullow Oil PLC shareholders are next month due to vote on approval for the sale of the company’s stake in Uganda, a transaction the company described as of “critical importance” .
The company’s board in a statement issued yesterday said it “unanimously recommends that all shareholders vote or procure votes in favour of the resolution” to green light the sale transaction during the July 13 shareholders’ meeting.
Tullow, in April, announced the sale of its remaining 33.33 per cent stake in Uganda to French oil giant Total E&P to raise $575m (about Shs2.1 trillion), amid the company’s financial doldrums.
Total E&P will pay Shs1.8 trillion ($500m) once the deal has been approved by government, and the balance of Shs780b ($75m) paid whenever Final Investment Decision (FID) is reached.
Total E&P also offered “conditional” or bonus payments to Tullow when commercial oil production starts in the future, and only if a barrel of brent crude—the global benchmark for oil—will be trading upwards Shs232,285 ($65) per barrel.
Yesterday, Tullow further indicated that the sales transaction had been approved by the UK financial watchdog, the Financial Conduct Authority.
However, the company being listed on the London Stock Exchange, the listing corporate governance regulations, provide the shareholders have to give nod to the transaction by a simple majority of votes cast.
Other conditions
Tullow also indicated the transaction remains subject to a number of other conditions, including customary government and other approvals and the execution of a binding tax agreement with the government and Uganda Revenue Authority on the “agreed tax principles previously announced.”
Once all approvals have been secured, the company expects the deal to be concluded by latest early August.
The deal attracted a paltry Shs54.6b ($14.6m) in Capital Gains Taxes (CGT), which Tullow Oil announced late-last month “can now be progressed” following Cnooc’s decision not to pre-empt —acquiring half of the shares floated to Tullow—a contractual clause in the joint venture partnership agreement.
Cnooc’s decision not to pre-empt makes validation of the deal even much easier, giving Total E&P majority shareholding of 66.66 per cent, and Cnooc 33 per cent in each of the Exploration Areas—EA, 2 and 3—upstream. But it also means more headache in the midstream, on the proposed crude oil export pipeline, hence Final Investment Decision will take a bit longer.
Last year, Total E&P, the lead coordinator on the pipeline, had frozen all activities amidst the bad blood with government, but officials are now in the process of resuming negotiations to conclude the Host Government Agreement.
