Tullow starts process to sell stake in $4.9 billion Ghana TEN oil project
BY SELINA WILLIAMS
LONDON -- Tullow Oil has begun a process to sell part of its 50% stake in the $4.9 billion Tweneboa, Enyenra & Ntomme (TEN) oil project off the coast of Ghana as it seeks to focus more on exploration and limit its development costs, the company said.
Through the sale, Tullow is aiming to reduce its exposure to hefty development costs, which had become a growing concern to its investors, while retaining a material interest and operatorship of the oil production, which is planned to commence mid 2016.
An industry leading run of exploration success almost tripled Tullow's shares between 2007 and 2012, but the company had lost around 10% of that value this year after investors balked at the potential costs of some of the ambitious developments.
A successful sale in Ghana will also help free up Tullow to focus on further exploration in projects in Africa and elsewhere. The company has six exploration campaigns under way in the second half of the year in 10 countries with 20 wells targeting multiple basins. It's also looking at development options for the over 300 MMbbl discovered onshore Kenya.
Tullow CEO Aidan Heavey said there had already been a lot of interest in Ghana TEN from potential buyers, including oil majors and Chinese oil companies, even before the process had official begun.
Quality projects like this in very stable countries are hard to come by. This is very much a sellers market, Mr. Heavey said.
Tullow had been waiting for government approval for the development plan for TEN project, which it received May 29, 2013 before it could seek buyers.
Under the process, Tullow plans to give a potential buyer as much as a 20% stake in the project in return for the buyer paying the development costs up until the first oil is produced. Tullow said it has appointed financial advisors and begun early marketing of the share.
The company plans to open a data room late August, get bids in around the end of October and finalize the process in the first quarter of 2014, CFO Ian Springett said.
The company has said the combined resources of the fields range from 200 to 600 MMboe, with most likely resources of 360 MMbbl of which 70% is oil.
First production from the TEN project is expected to be within 32 and 36 months after government approval of the development plan, which includes around 23 injection and production wells and aims to be producing about 80,000 bpd of oil.
Kosmos Energy, Anadarko Petroleum, Petro SA and Ghana National Petroleum are also partners in the TEN project.
Dow Jones Newswires