Tullow to acquire interests in Shell and ExxonMobil

Dec 20, 2004 01:00 AM

Tullow Oil announced that it has entered into agreements with Shell UK and Esso Exploration and Production UK to purchase their entire producing interests in the Schooner and Ketch gas fields and surrounding acreage.
The total consideration, financed through bank debt and internal resources, is £ 200 mm, inclusive of capital allowances, with an effective date of July 1, 2004.

The Schooner and Ketch fields bring proven producing assets and major development and exploration upside, strongly enhancing Tullow's strategic position in the Southern North Sea, and in particular in the Caister-Murdoch System.
The gas initially in place (GIIP) for the Schooner and Ketch fields is in excess of 1,500 bn cf of which only 350 bn cf has so far been recovered. Current production is approximately 60 mm cfpd gas. Tullow plans a work programme designed to substantially increase existing production levels with the potential to increase the ultimate recovery to 50 % of GIIP.

Aidan Heavey, Tullow's CEO commented: "This acquisition of Schooner and Ketch is a step-change for our UK gas business, adding substantial base production with significant upside potential and a material offshore operatorship that complements our existing assets in the Caister-Murdoch System."
"Following on from the Energy Africa acquisition completed in late May, the Schooner and Ketch acquisition completes a transforming year for Tullow, during which the company has concluded over a billion dollars of transactions."

The net consideration payable by Tullow on completion will reflect revenues and costs accruing to the interest from the effective date. The transaction will be financed through a combination of bank debt and internal resources. Completion is targeted for the first quarter of 2005.
The producing interests to be acquired are a 90.35 % interest in the Schooner field and a 100 % interest in the Ketch field. These fields have been in production since 1996 and 1999 respectively and currently produce approximately 60 mm cfpd of gas, which is transported to the Theddlethorpe terminal via the Caister-Murdoch System (CMS) infrastructure in which Tullow has a 17 % interest. The gas initially in place for the Schooner and Ketch fields is in excess of 1,500 bn cf of which only 350 bn cf has so far been recovered.

On completion, Tullow will commence a 3 year development programme, designed to substantially increase production levels with the potential to increase the ultimate recovery to 50 %. The work programme will consist of working over and sidetracking existing wells and drilling new wells to access previously undrained compartments in the fields.
This acquisition strongly enhances Tullow's already significant acreage position in this part of the Southern North Sea. In addition to the producing assets, Tullow will also acquire minority interests in the Topaz, Marjan, and 44/27-1 discoveries.

The acreage acquired also offers attractive exploration upside, principally from the Schooner Extension prospect, which liesimmediately southeast of the Schooner field. Tullow plans a fast-track subsurface evaluation of this prospect and two adjacent blocks that Tullow, as operator, was recently awarded in the 22nd licensing round.
This transaction transforms Tullow's UK gas business, further consolidates its position in the CMS core area and enables it to capitalise on its technical expertise developed through its current ownership of CMS assets. Upon completion, Tullow will operate over 60 % of its UK gas production.

Tullow Oil is one of the leading Independent International Oil & Gas Exploration and Production companies in Europe. Tullow has interests in over a hundred exploration and production licences spread over three core areas: UK North Sea, West Africa and South Asia. Tullow recently completed the acquisition of Energy Africa, bringing the number of countries in which Tullow is active to sixteen.
In the North Sea, Tullow's principal interests are in the CMS and the Thames/Hewett group of licences and the Bacton onshore gas-processing terminal on the Norfolk coast.

Tullow's CMS interests currently include Murdoch (34 %), Boulton (9.5 %) and CMS III (14.1 %), all of which produce via the CMS infrastructure to the Conoco operated Theddlethorpe terminal. Tullow currently receives a tariff from Schooner and Ketch via its 17 % CMS interest for transportation and processing.
In Africa, Tullow has production in Gabon, Cote d'Ivoire, Congo (Brazzaville) and Equatorial Guinea. Tullow also has exploration programmes in Morocco, Mauritania, Senegal, Cameroon, Uganda and Egypt.
In South Asia, Tullow has production and exploration interests in Pakistan and exploration activities in India and Bangladesh, where a three well drilling programme has just completed in Block 9.

Source: LiquidAfrica
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