Tullow Oil Plc (TLW) approached a record in London trading after signing production-sharing agreements with Uganda, paving the way for the U.K. oil explorer to secure partnerships with Total SA (FP) and Cnooc Ltd. (883)
Tullow has been awaiting government approval after agreeing in March to sell one-third stakes in its Ugandan finds to Total and Cnooc for $2.9 billion. Today’s accords, which include the Kingfisher field production license, mark “a vital step” in advancing the project in the Lake Albert basin, Chief Executive Officer Aidan Heavey said in a statement.
The shares rose 1.5 percent to close at 1,462 pence, 31 pence short of the peak on March 7.
“We can now move forward in closing the farmdown” agreement, George Cazenove, a London-based spokesman at Tullow, said by phone. Chief Financial Officer Ian Springett on Jan. 18 indicated that the deal could have been completed last month.
“The agreement removes the major barrier to completing” the transaction, Oswald Clint, an analyst at Sanford C. Bernstein & Co. in London, wrote in an e-mailed report. “There is also a stabilization clause in this morning’s agreement, which protects Tullow’s investment in the country (e.g. against tax increases) and was agreed upon by all parties.”
The Ugandan government has been delaying the partnership approval since at least October over contractual disagreements and an oil industry corruption investigation. The partners may invest about $10 billion to produce more than 200,000 barrels of oil a day as soon as 2015.
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