Tullow Seals $2.9Billion Deal

Tullow Oil plc (Tullow) an affiliate of Tullow Oil Ghana, last week signed Sale and Purchase Agreements (SPAs) with CNOOC and Total in respect of the sale of a one third interest to each party of the interests Tullow holds in Exploration Areas 1, 2 and 3A in Uganda, in a deal which include a total cash consideration payable to Tullow of US$2.9 billion.

A release announcing the deal said Tullow will retain a one third interest. The signing of the SPAs, satisfies a key condition of the Memorandum of Understanding (MoU) agreed among Tullow, the Government of Uganda (GoU) and the Uganda Revenue Authority (URA) on March 15, 2011.

Tullow is now to make certain tax related payments to the GoU, on receipt of which all relevant consents become final and the other provisions of the MoU become effective.

Under the MoU, Tullow and its new Partners, CNOOC and Total, have been granted new licences over EA-1 and an onshore area of EA-3A and the partnership's rights to develop the Kingfisher discovery have been confirmed. A clear plan for the resolution of tax disputes on the various asset sales has been agreed by the GoU, the URA and Tullow.

Tullow and its Partners will now reactivate the significant programme of exploration and appraisal drilling and progress their development plans for the basin which they will jointly present to the Government of Uganda for approval. Commenting on the deal, Aidan Heavey, Chief Executive, said:

"These agreements have secured the future of oil production in Uganda. Tullow, its partners and the Government of Uganda will now agree a development plan for the Lake Albert Rift Basin with a target of delivering production of at least 200,000 bopd and potentially much more as we continue to explore and appraise the basin. We are looking forward to working with CNOOC and Total, and continuing our strong relationship with the Government to bring the benefits of the oil to the people of Uganda."