Tullow Oil has sold its remaining stake in the Lake Albert oilfield in Uganda to French giant Total for $575 million (€484m), cutting most ties with one of the Irish-founded explorer's biggest discoveries.
The oil exploration company confirmed on Tuesday that it had completed the sale of its remaining Ugandan assets with the receipt of $500 million from Total.
Total is due to pay a further $75 million once it makes a final investment decision for the field, calculated to hold 1.7 billion barrels of crude oil.
Once the field begins production Dublin- and London-listed Tullow will receive agreed contingency payments if Brent crude prices rise above $62 a barrel.
The deal is designed to strengthen Tullow’s balance sheet. Tumbling crude prices combined with exploration setbacks have created problems for the company.
In September it reported that it had lost $1.3 billion in the first six months of this year as falling oil prices forced it to write down the value of its assets.
The group said on Tuesday that it had cut net debt to $2.4 billion, while it had $1 billion in cash.
Tullow chief executive Rahul Dhir noted that the $575 million from the sale formed an important part of the group's efforts to improve its financial position.
He and chief financial officer, Les Wood, will set out their plans for Tullow to investors at a capital markets day on November 25th. The explorer plans to raise $1 billion in total from selling some of its assets.
Tullow acquired exploration licences in Uganda in 2004 when it bought Energy Africa in a deal that ultimately transformed the Irish-founded company to one of the biggest independent oil explorers in the world.
In 2006 the group discovered a series of reservoirs across three wells. It added to these through buying Hardman Resources in 2007.
Tullow found further oil at other points in the basin, including Uganda’s biggest discovery at Jobi-Rii in 2009.
In 2012, Tullow sold two-thirds of its interests in Uganda to Total and Chinese giant CNOOC for $2.9 billion.
The new deal means that Tullow no longer holds any direct interest in the Ugandan oil licences.
Mr Dhir conceded that the sale “clearly evokes mixed emotions within Tullow”.
He added that the company would watch the progress of Uganda’s oil industry with interest.
Tullow has holdings in oilfields in Cote d'Ivoire, Equatorial Guinea, Gabon and Ghana. Its share of their oil production totalled 77,000 barrels a day in the first six months of the year.