Tullow Oil raises £925 mln in placing to accelerate development in Uganda and Ghana

Tullow Oil PLC (LSE: TLW) has successful raised £925 million through a placing of approximately 80.4 million new shares at a price of 1,150p each. The proceeds will be used to exercise its pre-emption rights over its Ugandan joint venture with Heritage Oil (LSE: HOIL).

With the completion of the fundraising, Tullow will now be able to block Eni S.p.A’s proposed deal with Heritage and buy the remaining 50% stake in the Uganda Block 1 and 3A block itself, for approximately £826 million.

The Heritage transaction comprises a US$1.35 billion (£826 million) cash payment and a further deferred consideration of up to US$150 million. The FTSE100 constituent intends to farm-down its subsequent 100% interest in the Uganda blocks. The farm-down has attracted a significant amount of interest from major international and national oil companies, Tullow said.  Discussions are at an advanced stage and bids have been received from a short-list of partners, which was pre-agreed with the Ugandan authorities.

"Tullow is well positioned with two major world-class development assets in Ghana and Uganda which provide a strong platform for its long-term production growth”, Tullow CEO Aidan Heavey commented, “Today's equity placing and planned Ugandan farm-down will ensure that we have the right capital structure to deliver further material value for all stakeholders across our entire portfolio."

According to Tullow the successful pre-emption and the subsequent farm-down, will increase activity levels and rate-of-spend as it works towards the development of Uganda as a material oil-producing country. As such Tullow will conduct a phase of accelerated exploration drilling, requiring more significant development expenditure. The company anticipates an additional capital spend of up to US$600 million over the next 3 years.

In its statement to investors, Tullow’s said the remaining balance from the placing and the proceeds of the farm-down process will provide a more appropriate capital structure for the medium term. Specifically, Tullow expects it will be able to maintain a US$500 million per-year exploration programme, accelerate the development of its Uganda assets and support the appraisal and development of the Tweneboa and Jubilee projects in Ghana.  http://www.proactiveinvestors.co.uk/companies/news/12682/tullow-oil-raises-925-mln-in-placing-to-accelerate-development-in-uganda-and-ghana-12682.html