Irish-founded Tullow Oil's €150 million sale of stakes in two African reservoirs will cut spending by around €10 million, according to a company circular.
Tullow is selling stakes in offshore fields in Gabon and Equatorial Guinea to Norwegian group Panoro Energy in a deal worth up to $180 million (€150 million) to cut costs and its €2.4 billion debt.
The group will ask shareholders to vote on the deal at a general meeting on March 18th in London. Stock exchange rules require a simple majority of backers to support the deal in order for it to go through.
In a circular outlining the deal’s terms to investors on Tuesday, Tullow said that, if the transaction goes ahead, it will cut the oil exploration and production company’s capital spending this year by approximately $12 million (€10 million).
The London-listed group announced earlier this month that it had agreed to sell all of its interests in Equatorial Guinea and its stake in Gabon’s Dussafu oil fields to Panoro.
Panoro will pay $89 million up front for the Equatorial Guinea interests, and a further $16 million tied to oil production and prices.
The Norwegian company will pay $46 million up front for Dussafu and a further $24 million based on oil prices and production. Panoro will pay $5 million on top of those sums once both deals have completed.
Tullow sold its stake in the Lake Albert basin in Uganda to French giant Total in November 2020 for $500 million, ending a 16-year long involvement with the field.
Proceeds from the sale aided the company in cutting its net debt to $2.4 billion at the end of last year from $2.8 billion 12 months earlier.
The circular states that the company will hold the proceeds of the Gabon and Equatorial Guinea sales to strengthen its balance sheet.