Tullow Chief, Uganda President to Discuss Oil Asset Sale

Lake Albert, Uganda, Republic of Congo
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KAMPALA, Uganda (Dow Jones), Jan. 21, 2010

The Chief Executive of UK-based Tullow Oil PLC is expected to hold talks with the Ugandan president Friday to discuss issues related with the company's exercise of preemptive rights to acquire the Ugandan interests of Heritage Oil PLC, officials said Thursday.

A company official with Tullow Oil Uganda said that Aidan Heavey, Tullow's Chief Executive, would arrive in the country Thursday evening and hold talks with the Ugandan president Friday.

"The Chief Executive will present to the president a list of potential partners to develop Ugandan oil fields," the official said. An official at the Ugandan president's office confirmed the meeting.

Heritage agreed last month to sell its half-share stake in two Lake Albert oil blocks to Italian oil company Eni Spa --which currently has no presence in Uganda--for up to $1.5 billion. Tullow has since exercised its contractual right to pre-empt that deal and buy the assets itself.

Tullow already owns the remaining half-share in the two Lake Albert oil blocks where Heritage is selling its stake, and 100% of a third, neighboring block. A successful preemption would give Tullow full ownership of the three blocks, where around a billion barrels of oil have already been discovered. However, Tullow says it would not retain full ownership of the three blocks, and would quickly sell up to half the assets to one or two major international oil companies that could assist in development of oil infrastructure.

ExxonMobil Corp. and Total SA are among Tullow's most likely potential partners, according to people familiar with the situation.

News of Friday's meeting follows a warning Thursday from Hilary Onek, Uganda's minister of energy and minerals development, that the government could veto Tullow Oil's preemption of Eni's $1.5 billion takeover deal on monopoly and other grounds.

Political analysts said President Yoweri Museveni has the power to overrule his cabinet and will have the final say on the Heritage asset sale.

Uganda's oil committee at the ministry of energy and minerals development is scrutinizing the preemption and is expected to advise the cabinet on the way forward very soon, according to government officials.

Copyright (c) 2010 Dow Jones & Company, Inc.

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