Tullow has entered into a Sale and Purchase agreement (SPA) with Heritage Oil & Gas Limited ("HOGL") and Heritage Oil Plc ("Heritage") to purchase their entire interest in Block 1 and Block 3A in Uganda. This follows Tullow exercising its right of pre-emption on January 17, 2010 and the approval of the transaction by Heritage shareholders yesterday.
The terms of the transaction include a consideration of US $1.35 billion cash and a further contingent, deferred consideration of up to US $150 million cash or an interest in a mutually agreed producing oil field independently valued at a similar amount.
The SPA contains various conditions, including the approval of Tullow Uganda as the purchaser by the Government of Uganda. Tullow will now work closely with Heritage, HOGL and the Government of Uganda to expedite the approval process which is expected to be completed in the first quarter of 2010.
In parallel with the HOGL asset purchase process, with Government support, Tullow has been running a transparent farm-out process which has attracted interest from major international and national oil companies. Tullow is currently discussing preferred partners with the Government and expects to complete this transaction in parallel with the purchase from HOGL and Heritage.
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