$300m deal sees Tullow boost its presence in Ghana

TULLOW OIL is poised to boost its presence in Ghana through a cash-and-shares deal valued at over $300 million (€212 million).

The Irish oil and gas exploration group expects production this year to hit 100,000 barrels a day, mainly driven by its stake in the Jubilee oil field off Ghana’s coast, which Tullow operates.

In its second such announcement this week, the group said yesterday that it has agreed to buy all the interests that another stakeholder, EO Group, holds in oil fields off Ghana’s coast for $305 million.

Tullow said the deal would increase its interest in the West Cape Three Points licence in offshore Ghana by 3.5 per cent to 26.4 per cent and increase its holding in the Jubilee field by 1.75 per cent to 36.5 per cent.

The company is paying for the purchase through a combination of shares and cash. In a statement, it said it would issue 10.13 million shares to EO Group in satisfaction of $216 million of the total purchase price.

The stock is valued on the basis of an average of five days trading up to May 24th and exchange rates during that period. The balance, including certain working capital adjustments, will be paid in cash. The deal is subject to regulatory approval and will date from December 1st, 2010.

Commenting on the purchase yesterday, Tullow chief executive, Aidan Heavey said it demonstrates the group’s long-term commitment to Ghana. “This acquisition represents an excellent opportunity to extend our interest in these high-quality assets in Ghana.”

This is the second such transaction that Tullow has announced this week. On Tuesday it revealed it is buying Nuon Exploration Group from Scandinavian utility Vattenfall for €300 million in a move that will increase its presence in the North Sea. That deal will give it stakes in 25 licences in 30 natural gas-producing fields off the Dutch coast. It will add the equivalent of 9,000 barrels a day to the company’s production from that region.

Tullow has a substantial focus on Africa, and the Jubilee field and its other Ghanaian interests are amongst a number of potentially lucrative licences it holds on the continent. Production from the Jubilee field began on schedule late last year, and the group is continuing to explore the area.

It is planning to spend between $1 billion and $1.5 billion on development this year.