Cnooc, Total Sign Agreements to Buy Tullow Ugandan Assets After Tax Deal

Cnooc Ltd. (883) and Total SA (FP) signed agreements to buy stakes in Tullow Oil Plc (TLW)’s Ugandan exploration interests, two weeks after the African nation said it settled a tax dispute with the U.K. energy producer.

Cnooc will pay $1.467 billion for a one-third stake in Exploration Areas 1, 2 and 3A in the Lake Albert Rift Basin, according to a statement today by the Hong Kong-listed unit of China’s biggest offshore oil and gas explorer. France’s Total will also buy a one-third stake in the three areas, Cnooc said. Tullow will get $2.9 billion from the sale, the U.K. company said in a separate statement.

The Ugandan government said March 15 it signed a memorandum of understanding with Tullow under which the U.K. explorer would settle taxes, clearing the way for a partnership with Cnooc and Total. London-based Tullow last year paid about $1.5 billion to Heritage Oil for its interests in Block 1 and 3A in the Lake Albert basin. Uganda withheld approval until the issue of capital gains tax was resolved.

Cnooc’s transaction is expected to be completed in the first half of 2011, subject to approval by the Ugandan and Chinese government and regulators, the Beijing-based company said. Oil production across the basin is expected to exceed 200,000 barrels per day eventually, Cnooc said.

Tullow shares suffered their steepest one-day loss in two months on March 9 after the company reported “slower progress’ in ending the dispute in Uganda. The stock closed 1.9 percent higher at 1,444 pence in London yesterday.

Cnooc shares rose 2.1 percent to HK$19.42 in Hong Kong at 1.57 p.m. local time, while Total shares were 0.4 percent higher at 42.755 euros at the close yesterday.

To contact the reporter on this story: Baizhen Chua in Beijing at bchua14@bloomberg.net

To contact the editor responsible for this story: Michelle E. Frazer at mfrazer@bloomberg.net; Clyde Russell at crussell7@bloomberg.net

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