Tullow Oil plc will sell its Guyana subsidiary, including its operated 60% in the Orinduik licence, to Eco Guyana Oil & Gas (Barbados) Ltd for an approximate potential of $14.7 million in cash and contingent payments.
EXPLORATION
Tullow said its decision to exit Orinduik was in line with its strategy to focus on its assets in Africa and infrastructure-led exploration around producing hubs in emerging basins.
In 2019 the company failed to find commercial discoveries from two exploration wells but yesterday said the licence had remaining potential, offering benefits from any future success through the terms of the sale.
TERMS
The transaction will see Tullow receive $700,000 cash on transfer of the licence equity and operatorship to Eco, with completion of the sale expected during the second half of 2023.
Contingent payments, linked to potential future milestones, include $4m on a commercial discovery and $10m on issue of a production licence.
Royalty payments on future production comprise 1.75% of the 60% working interest entitlement revenue net of capital expenditure and lifting costs.
Proceeds of the sale, which is subject to conditions precedent and regulatory approvals, will fund Tullow’s general corporate purposes.