Tullow did not notify Govt. of plans to sell majority shares in Orinduik oil block – Jagdeo

Aug 26, 2023 ExxonMobil, News, Oil & Gas

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Kaieteur News – Guyana’s Vice President (VP) Bharrat Jagdeo, on Thursday disclosed that United Kingdom (UK)-based Company Tullow Oil Plc, agreed to sell its Guyana’s subsidiary majority stake in the not-yet producing Orinduik Oil Block, without formally notifying the Government of Guyana.

On August 10, Tullow in a statement said that it has agreed to sell Tullow Guyana B.V. (TGBV) total interest for the Orinduik licence, of 60% operated equity to its minority partner, Canada-based explorer, Eco-Atlantic Oil & Gas Ltd. in exchange for a combination of upfront cash, US$700,000, and potential future payments if production starts.

However, VP Jagdeo during his last press conference said that the government heard about the company’s decision but was not formally notified.

“The last two days ago, I spoke with (Minister of Natural Resources) Vickram Bharrat and at that time, we had not received notification,” Jagdeo said, adding, “We had not been notified about this, we’ve been hearing about it…but that has to come through a formal process to us.”

Notably, the Vice President underscored that Tullow will need to formally notify the government because such decision has to be approved by the Government of Guyana.

Moreover, if the deal is finalised, Eco’s 15% stake would increase to 75% in the Orinduik oil block – making it the operator of the block with the remaining 25% interest owned by TotalEnergies (TTEF.PA).

In its statement, Tullow said, “Tullow’s decision to exit the Orinduik licence is in line with its strategy to focus on its high return production assets in Africa and infrastructure-led exploration around producing hubs and delivers its objective to unlock value in emerging basins.”

The company noted that in 2019, it drilled two exploration wells in the Orinduik oil block, which yielded uncommercial oil discoveries. Nonetheless, Tullow said it recognises the material oil resource potential remaining in the Orinduik and as such, the terms of the Transaction allow Tullow to retain exposure to any potential future success in the region.

The transaction summary is as follows: US$700,000 cash payment upon transfer of Tullow’s 60% equity and operatorship of the Orinduik licence to Eco. Notably, it was stated that the monies must be paid to Tullow Overseas Holdings B.V. (TOHBV) on completion of the transaction.

Also, the contingent consideration is also payable to Tullow’s overseas company: a US$4M in the event of a commercial discovery, US$10M payment upon the issuance of a production licence from the Government of Guyana and Royalty payments on future production – 1.75% of the 60% working interest entitlement revenue net of capital expenditure and lifting costs.

Notably, the completion of the sale is expected to occur in the second half of 2023 and the proceeds from the transaction will be put towards general corporate purposes – Tullow said.

Jean-Medard Madama, Director Exploration, Non-Operated Assets and Decommissioning, said, “This transaction is in line with our strategy to optimise our portfolio through opportunities to unlock value from our emerging basin licences, whilst focusing our capital expenditure on our high return producing assets and growth opportunities around existing infrastructure.”

Back in July, Eco Atlantic Chief Executive, Gil Holzman told Upstream that the Orinduik partners are in the analyzing stage to figure out the best targets to drill for “light oil.”

“We are currently planning, reviewing and analyzing to understand exactly what the best targets are to drill for light oil, and we have three options,” Holzman told Upstream. The Chief Executive noted too, “We’re very bullish about the potential of Orinduik and are working with Tullow to find the right way to [proceed].”

Last year, this publication reported that from Eco’s Competent Person’s Report (CPR) on its assets Offshore Guyana, it was revealed that the Orinduik Block holds estimated 8.1B barrels of oil. With respect to its Guyana asset, the main one being Orinduik Block, it was noted that the concession carries a best estimate of 8.1 billion barrels of unrisked oil and gas liquids along with 6.8 billion cubic feet of gas. It was observed from the report that 681 million barrels of oil and 544 billion cubic feet of gas are net to Eco.

ABOUT ECO

Eco Atlantic is an oil and gas exploration company with offshore licence interests in Guyana, Namibia, and South Africa. Eco has often said it aims to deliver material value for its stakeholders through its role in the energy transition to explore for low carbon intensity oil and gas in stable emerging markets close to infrastructure.

Offshore Guyana in the proven Guyana-Suriname Basin, the company holds a 15 percent Working Interest in the 1,800 km2 Orinduik Block operated by Tullow Oil.

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• Guyana, licence, Namibia, Orinduik, South Africa

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