Deal includes two gas packages and interests in 18 offshore licences


Tullow has agreed to pay up to £201 million sterling (€324.93 million) for two North Sea gas producing packages and associated pipelines and infrastructure. The purchase includes interests in a total of 18 offshore licences, including one awarded but not yet issued, and several undeveloped gas discoveries and a number of exploration prospects and leads.

Tullow is paying £66.6 million for the Murdoch package, with £63 million due on completion and the balance payable on the later of March 29th 2002 or 12 months after completion. The Thames/Hewett package will cost £134.4 million, with £117.0 million payable on completion, £10 million payable six months after completion and the balance due on the later of March 29th 2002 and 12 months after completion.

But the £201 million price will be automatically reduced if assets are taken out of the packages through the exercise of pre-emption or equivalent rights by the existing co-owners.

Tullow paid a deposit of £1 million on the signing of the acquisition agreements and a further deposit of £4 million will be paid following the commencement of dealings in the new ordinary shares. Of the £201 million sterling price some £21 million is deferred consideration. The price agreed is based on evaluation of the proven reserves as at January 1st 2000. Because the acquisition is not expected to be completed until the fourth quarter, the operating cash flows generated by the assets between January 1st 2000 and completion will reduce the cash payable on completion.

Tullow has estimated that if completion takes place on September 30th 2000, the £201 million consideration could be reduced by about £38 million sterling. They believe that the net consideration due at completion will be approximately £142 million sterling - the agreed £201 million price less the deferred element of £21 million and the operating cashflow amount of £38 million.