Tullow Oil Plc won’t wait forever to get its Ugandan stake sale signed off.
The U.K. oil company, which is trying to offload a 21.57% stake in Ugandan exploration areas to Total SA, has seen its plan stall as the government persistently fails to give the go-ahead. It’s now looking for alternative ways to get the deal done.
“What we put together we thought was in the best interest of all parties, including the government of Uganda,” Tullow Chief Executive Officer Paul McDade said Wednesday. “We feel somewhat frustrated 2 1/2 years later that the efforts on that farm-down structure have been unsuccessful in completing.”
Negotiations on the sale have focused on taxes related to the transaction. While Tullow agreed to the principle terms for its portion of the levies earlier this year, the deal is yet to be finalized with all parties.
“What we’re doing is gently standing back and looking at: are there other ways to structure the deal?” McDade said in a phone interview. “It’s really just about not continuing just to try and push the same thing.”
The sale to Total would mean a cash payment to Tullow of $200 million, with a further $700 million deferred for development. As a result, the French major would increase its stake in the Ugandan project to 54.9%, leaving Tullow with 11.76%, the companies said when they agreed on the transaction back in 2017.
Tullow shares rose as much as 1.9% in London, and were up 1.5% at 210.90 pence as of 11:16 a.m. local time.
The company has been active in Uganda since 2004, when it entered into three exploration licenses in the Lake Albert Rift Basin. By 2009, several discoveries proved that development would be commercially viable. The fields are estimated to contain as much as 1.4 billion barrels of recoverable oil.