Tullow Oil to sell West African assets to Panoro for $180m

Tullow Oil has agreed to sell its oil producing assets offshore Equatorial Guinea and the Dussafu asset in Gabonese waters to Panoro Energy for a total of up to $180m.

In this connection, the parties have signed two separate sale and purchase agreements.

Panoro Energy will acquire a stake of 14.25% in Block G in the territorial waters of Equatorial Guinea.

The Equatorial Guinea asset is made up of six producing oil fields in water depths of 50-850m, located nearly 35km from shore. Production from Block G began in 2000 through the Ceiba field.

Currently, the net production from Block G is around 4,500 barrels of oil per day (bopd), with a potential to increase to nearly 8,000bopd net in 2023-25.

Trident Energy is the operator of Block G with a stake of 40.37%, while Kosmos Energy (40.37%) and GEPetrol (5%) are the other partners.

As per the second deal, Panoro Energy will acquire an additional stake of 10% in Dussafu Marin Permit, offshore Gabon. Through its subsidiary Pan Petroleum Gabon, Panoro Energy currently has a stake of 7.5% in the Dussafu asset.

The Dussafu asset is currently producing around 15,000bopd gross from the Tortue field. It is expected to ramp up to about 20,000bopd this year by adding two more wells at Tortue.

Furthermore, the Hibiscus/Ruche development in the asset is estimated to increase the production to nearly 40,000bopd in 2023. Further growth potential is anticipated through the Hibiscus/Ruche phase 2 project.

The Dussafu permit also contains the Ruche North East, Moubenga, and Walt Whitman discoveries.

The other partners of the Dussafu permit are operator BW Energy Gabon (73.5%) and Gabon Oil (9%).

Tullow Oil CEO Rahul Dhir said: “These are important, value accretive deals for Tullow that will have a positive effect on our financial position as we look to further reduce our net debt and continue constructive discussions with our creditors. These transactions are also in line with our strategy of investing our capital on cash-generative, high return investment opportunities in our core portfolio.”

The consideration for the Equatorial Guinea assets is $105m, for the Dussafu asset is $70m, and an additional $5m to be paid after the closing of the two deals.

For the Equatorial Guinea assets, the Norway-based Panoro Energy will pay upfront $89m in cash and conditional cash payments of up to $16m based on asset performance and oil price.

The second transaction will see the Norwegian oil and gas firm pay $46m upfront in cash and contingent payments of up to $24m depending upon asset performance and oil price.

Panoro Energy CEO John Hamilton said: “These truly transformational Acquisitions will establish Panoro as one of the world’s leading independent E&P companies focussed on Africa. We are purchasing high-quality, low operating cost assets, substantial production and material reserves in West Africa.

“These are highly accretive assets that deliver a major change in our operational and financial profile, and position the Company well to generate sustainable long-term value for our shareholders.”

The deals are expected to be closed in the first half of this year, subject to receipt of the required approvals and meeting of customary conditions.

Source: NS Energy

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