Tullow Oil has exited the Orinduik licence, where it had a 60% operating equity, through the sale of Tullow Guyana’s stake in Eco Guyana Oil and Gas.
The transaction, according to the company’s media release, includes a cash payment of $700,000 to Tullow Overseas Holdings BV following the transfer of capital and the operation of the Orinduik license to Eco.
Further consideration will be paid to Tullow Overseas if certain potential future milestones are triggered, such as $4 million in the case of a commercial discovery and $10 million in the case of the issuance of production licenses by the Government of Guyana, Tullow pointed out.
The deal also ensures royalty payments on future production to Tullow are 1.75 per cent of revenue on 60 per cent of working interests net of capital expenditure and lift costs , Tullow pointed out.
Tullow said its decision to exit the Orinduik license is in line with its strategy to focus on its high-yielding production assets in Africa and infrastructure-led exploration around of the producing centers and fulfills its objective of unlocking value in the emerging basins.
In 2019, Tullow drilled two exploration wells under the Orinduik license that produced non-commercial oil discoveries. However, Tullow said it recognizes the material oil resource potential remaining in the Orinduik license and as such the terms of the transaction allow Tullow to retain exposure to any potential future success in the region .
The transaction is expected to be completed in the second half of 2023, the company said.
“This transaction is in line with our strategy to optimize our portfolio through opportunities to unlock value from our emerging basin licences, while focusing our capital expenditure on our high yielding assets and growth opportunities in the around the existing infrastructure,” said Jean-Medard Madama, director of exploration. , non-operating assets and decommissioning, he said.
The agreement comes just a day after the company announced that it had obtained approval from the Government of Gabon for the extension of several of its Gabon licenses until 2046.
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