2011-04-05-2011-03-30

Transaction Type
Sellers
Buyers
Announce Date
Post Date
Estimated Price
3BB
Description

To buy a combined two-thirds WI in exploration areas 1, 2 and 3A in Lake Albert Rift Basin in Uganda, covering nearly 10,000 square kilometers.

CNOOC Ltd., Hong Kong, (NYSE: CEO) and french oil major Total SA (NYSE: TOT) each plan to acquire a one-third interest from Irish firm Tullow Oil Plc in exploration areas (EA) 1, 2 and 3A in Uganda. Each company will pay approximately US$1.5 billion for the interests for a total deal value of around US$3 billion.

EA 1, 2 and 3A are in the Lake Albert Rift Basin in Uganda. The three licenses cover a total area of close to 10,000 square kilometers. As estimated by Tullow, more than 1 billion barrels of P-50 recoverable volume of oil has been discovered in the basin since 2006.

Pro forma, all three joint-venture companies will each hold a one-third interest in the Uganda exploration areas. The project partners have agreed that the operatorship shall be determined by the government of Uganda upon completion of the transaction. It has been proposed that CNOOC, Tullow and Total will each assume operatorship in relation to the interests in EA 3A, 2 and 1, respectively, after a transitional period during which Tullow will act as an interim operator.

The partners are committed to coordinated operations and integrated development plans across the three exploration areas in the Lake Albert Basin. It is expected that the basin-wide production rate will eventually exceed 200,000 barrels of oil per day, CNOOC said in a public statement.

According to Total, the partners are considering a development plan consisting of installing production facilities around a principal production center in the northern area of the basin and a secondary one in the southern area. The project also includes an export pipeline to carry the oil to the Indian Ocean to access international markets. In addition, the partners will, with the Ugandan government, study and promote the construction of a domestic refinery that will allow the country to benefit directly from refined products.

The transaction is expected to be completed in the first half of 2011.