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7 Pages

Total goes all-in on Uganda as Tullow reduces position in US$900m deal


Total goes all-in on Uganda as Tullow reduces position in US$900m deal

Report summary

Total is buying 21.57% of Tullow Oil's 33.33% stake in the Lake Albert project, northwest Uganda, for a headline consideration of US$900 million. Total, Tullow and CNOOC formerly held equal one-third stakes in the project. Tullow is seeking to reduce the burden of its capital commitments in East Africa. Since 2005, over 1.4 billion barrels of commercial reserves have been discovered in the Lake Albert Basin. A basin-wide development project will supply a peak of just over 200 kb/d to a new-build refinery and to international markets through a Tanzanian export pipeline. We assume FID in Q1 2018 and first oil in 2022. Of the US$900 million consideration, only US$100 million will be paid on deal completion, with the remainder falling across various milestones. We have calculated an effective consideration of US$717 million (2017 real). Our valuation is lower than this, but is highly sensitive to oil prices.

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  • Total goes all-in on Uganda as Tullow reduces position in US$900m deal PDF - 608.14 KB 7 Pages, 8 Tables, 1 Figures

Description

The upstream oil and gas industry conducts activities against a backdrop of growing energy and environmental challenges. Political instabilities, international conflicts and government and environmental regulation have all impacted the production process.

This has forced companies to re-examine their corporate strategy, moving away from high-risk exploratory drilling to lower-risk exploration in mature basins as they search for increased returns.

This Upstream Oil and Gas Deal Insight report provides an in-depth analysis of this deal. You will also find information about upstream assets and the strategic rationale behind the deal.

For investors and businesses, this deal insight report provides an understanding of the effect this deal will have on the market, including oil and gas pricing and assumptions. Use it to keep up to date with deal announcements, gain expert insights and analyse potential developments that might affect your strategy.

Wood Mackenzie goes beyond company-reported data and announcements to give you an independent and informed view. Our unique valuation metrics are underpinned by our deep understanding of upstream assets and companies. We help you objectively benchmark and evaluate asset and corporate deals so you can compare deal economics around the world.

  • Executive summary
  • Transaction details
  • Upstream assets
  • Deal analysis
  • Upsides and risks
    • Upsides
    • Risks
  • Strategic rationale
    • Total
    • Tullow
  • Oil & gas pricing and assumptions

In this report there are 9 tables or charts, including:

  • Executive summary
    • Executive summary: Table 1
  • Transaction details
  • Upstream assets
    • Lake Albert Development map and capex schedule
    • Upstream assets: Table 1
    • Upstream assets: Table 2
  • Deal analysis
    • Deal analysis: Table 1
    • Deal analysis: Table 2
    • Deal analysis: Table 3
  • Upsides and risks
  • Strategic rationale
  • Oil & gas pricing and assumptions
    • Oil & gas pricing and assumptions: Table 1
    • Oil & gas pricing and assumptions: Table 2
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