Tullow Oil shares fall on failed $900m Uganda sale

Tullow Oil shares fell more than 5% after the Irish-founded exploration company announced the termination of its long-standing agreement to sell a third of its interests in Uganda in a $900m (€814m) deal.

Tullow has, for some time, been trying to finalise an agreed deal to sell down its stake in the undeveloped Lake Albert project, in the eastern African nation, from 33% to 11% to the China National Offshore Oil Corporation (CNOOC) and French oil major Total.

However, it has been held up by failure to agree full tax terms of the deal with the Ugandan authorities. As a result, the timeframe for the deal's completion has run out and Tullow's sale and purchase agreements with Total and CNOOC have expired.

Tullow recently said it was hopeful of completing the deal by the end of this year. However, it has now said a further delay is likely due to it having to initiate a new sales process. It is unclear whether CNOOC and Total will re-bid.

The original sale and purchase agreement, signed at the start of 2017, would have seen Tullow receive $200m in staggered cash payments and $700m to be used by it to fund its share of development costs.

Tullow CEO Paul McDade said the company remains committed to reducing its equity stake.