Tullow announces UK transactions

ISEQ-listed Tullow Oil has entered into an agreement with ChevronTexaco to acquire its 50% equity in the licence that contains the Orwell gas field (Block 50/26a).

Tullow will, on completion, own a 100% interest in Orwell and its associated export pipeline.Tullow is the current operator of the field.

The total consideration for the transaction is £14.3m (€21.3m), with an effective date of October 1, 2003.

Completion of the transaction is anticipated to occur during the second quarter of 2004, subject to governmental and co-venturer approvals.

Tullow has also completed an agreement with ExxonMobil to acquire an additional 35% interest in Block 50/26b.

This takes Tullow’s interest to 100% in the Block, which contains a sizeable gas discovery known as “Fizzy”.

The discovery, which lies 12km south of the Orwell field, has a high inert gas content, but also about 130bcf of methane gas.

Tullow is currently investigating potential development scenarios for this discovery through the Orwell system and back to the Tullow-operated Bacton onshore terminal.

Tullow also acquired 100% of Block 48/22a and the 20% of Block 48/23a it didn't own already.

These Blocks contain the “Blythe” gas discovery and are located adjacent to the Tullow-operated Hewett infrastructure, which is linked to the Tullow-operated Bacton plant. Possible tie-back development options are currently under review.

The consideration for the deals comprises an initial payment of £10,000 (€14,933), the assumption of all licence obligations, and the award of an over-riding royalty to ExxonMobil on potential future production from Blythe in excess of 80bcf of reserves.

"These two deals further consolidate Tullow's position in our SNS Core Area gas assets, at a time when the depletion of UK gas reserves is placing upward pressure on prices and increasing the strategic value of gas infrastructure," commented Aidan Heavey, Tullow's CEO.

Tullow also announced earlier today that it is to abandon the Kiarsseny Topaze South-1 exploration well, offshore Gabon, after showing no significant quantity of recoverable oil.

But it added it plans to continue with a comprehensive exploration programme for this prospective licence area.

"We remain confident that this very large licence contains a number of prospects and plays which are the focus of an aggressive exploration programme," commented Heavey.

"Our exploration programme is continuing in Bangladesh, where the Lalmai well spudded on March 8, and in the UK where the Monroe well is currently drilling," he added.