Tullow Oil buys Ghana company

TULLOW Oil has acquired the Ghanaian exploration company EO Group for $305 million (€216m) in a cash and share deal, marking the Irish firm’s second acquisition this week.

Tullow has described the African buy as representing “an excellent opportunity” and which will increase its interest in the West Cape Three Points licence off the Ghana coast.

It follows on from Tullow’s €300m acquisition of Dutch company Nuon Exploration & Production earlier in the week.

The EO Group purchase will up Tullow’s holding in the aforementioned West Cape Three Points licence by 3.5% to 26.4% and also increase its holding in the Jubilee Field by nearly 2% to 36.5%.

Commenting on the deal, Tullow chief executive Aidan Heavey said: “This acquisition represents an excellent opportunity to extend our interest in these high-quality assets in Ghana.

“Following our exploration and production successes over the last few years, which culminated in first oil in late 2010, this purchase further demonstrates our long-term commitment to Ghana and our belief in its significant remaining potential.”

As part of the consideration, Tullow will issue just over 10.1 million ordinary shares, at a price of 10p each in the share capital of the company, to EO to satisfy around $216m of the total purchase price.

The balance, which will include certain working capital adjustments, will be paid in cash.

The deal is reliant on various approvals, including that of the Ghanaian government.

Tullow has already said that 2011 is likely to be a transformational year for its business, and a truly international one

The company intends to undertake significant drilling rounds in Africa and South America later this year, while this week’s Dutch acquisition increases its gas production levels in the North Sea and gives it stakes in a further 25 licences there, including more than 30 producing fields.