Tullow Oil plc today announced that Tullow Gabon Limited (the seller), a wholly owned subsidiary of Tullow, has signed a sale and purchase agreement (SPA) with Gabon Oil Company (the “Purchaser”) for the sale of 100% of the shares in Tullow’s subsidiary, Tullow Oil Gabon S.A. (TOGSA), which holds all of Tullow’s non-operated working interests in Gabon (the “Disposed Assets”) for a total cash consideration of US$300 million net of tax (the “Transaction”), subject to customary adjustments.
Transaction highlights
- Corporate sale of Tullow’s entire Gabonese portfolio of assets, representing c.10 kbopd of 2025 production guidance and c.36 million barrels of 2P reserves (independently audited at year-end 2024).
- The total cash consideration of US$300 million net of tax (subject to customary adjustments) due on Completion.
- The conditions precedent to be met in advance of the Completion of the Transaction include all necessary government and regulatory approvals.
- Completion of the Transaction, satisfaction of conditions precedent and receipt of funds are expected around the middle of the year.
Richard Miller, Chief Financial Officer and Interim Chief Executive Officer, Tullow, commented: “We continue to make strong progress towards completing this strategic, value accretive divestment of our Gabon assets, with the signing of the SPA.
The proceeds, expected in the coming months, will materially reduce our net debt and strengthen our balance sheet, which positions us well as we look to optimise our capital structure.”
“Looking ahead, the Transaction enables Tullow to continue to deliver against our business objectives to unlock value from our high-margin, self-funded assets to grow our reserve base and create value for all stakeholders.”
Rationale for and expected benefits of the Transaction
- Value accretive transaction that significantly reduces leverage, further strengthens Tullow’s balance sheet and is in line with Tullow’s strategy of focusing on high-margin, self-funded production with strong cash flows.
- Positions the Group well to optimise its capital structure in 2025 and accelerate deleveraging.
- Revised portfolio of assets will enable Tullow to leverage its technical skills and focus on more material positions in key fields to grow its reserve base.
- Provides strong foundations for organic growth within the core portfolio and inorganic growth opportunities, with a focus on deepwater operated positions in West Africa.
Use of proceeds
Net proceeds from the Transaction will be used to strengthen Tullow’s balance sheet by materially reducing Tullow’s net debt and are therefore expected to reduce the risk associated with a holistic debt refinancing expected in 2025.
