Tullow Oil has announced its shareholders’ approval for the sale of its entire interests in Block 1, 1A, 2 and 3A in Uganda and the proposed East African Crude Oil Pipeline System to French giants, Total.
At a General Meeting of its shareholders on Wednesday, July 15 2020, the agreement was passed by the requisite majority of its shareholders.
A total of 788,781,164 votes which represents 99.93% of the stakeholders voted in favour of the transaction while a total of 565,765 which represents 0.07% of the votes did not approve of the transaction.
The transaction remains conditioned to several conditions which include customary government approvals and the execution of a binding tax agreement with the Ugandan government and the country’s Revenue Authority. After all of the listed conditions are met, the transaction is expected to be completed in the second half of 2020.
After the Ugandan government’s approval, the company will receive $500 million in the second half of this year and use the proceeds to pay off its debt. It is expected that Tullow will want to quickly seal off the deal, as it is a major step in its debt payment. The company is expected to raise over $1 billion from this and other transactions before the year runs out.
In April, Tullow announced it is selling off its entire asset in Uganda to Total for $575 million. The sale value of the deal with Total is a downgrade on a deal Tullow had reached with Total and CNOOC in 2017 to sell 21.57 per cent of its assets for $900 million. A deal which would have still kept Tullow with a stake of 11.76 per cent in the Lake’s oil projects. The deal didn’t go through because of a fall-out in talks between the oil companies and the Ugandan government’s tax body as there was a disagreement over the capital gains tax that Tullow was expected to pay from the sale of its assets.