Tullow Oil says it has received 264 Billion shillings “earnout” from TotalEnergies after a Final Investment Decision for the Tilenga Project in Uganda and the East African Crude Oil Pipeline (EACOP)
The Irish-founded company said in a statement on Wednesday that the FID taken by Total Energies Ltd (“Total”) on February 1, 2022, has triggered a contingent consideration of USD 75 million (264 billion Shillings) in relation to Tullow’s sale of its assets in Uganda to Total in 2020.
“Tullow will continue to have exposure to the Tilenga Project through additional cash consideration which may be received in the form of contingent payments depending on the average annual Brent price once production commences.” Said the statement
“Earnouts” or Contingent consideration represents payments that buyers and sellers will pay or receive after the closing of a transaction based on future performance. Tullow Oil plc (Tullow) on November 10, 2020 announced that the sale of its assets in Uganda to Total had been completed with a USD 500 million payout.
According to the sale agreement with Totalenergies, Tullow was to receive a further USD 75 million when a Final Investment Decision is taken on the development project. It is supposed to receive an unspecified amount of money in contingent payments linked to the oil price payable after production commences.
It had been anticipated that the conclusion of the deal would see Tullow Plc out of Uganda after almost sixteen years of successful oil exploration in the Albertine where CNOOC and TotalEnergies are about to begin getting oil out of the ground.
Tullow’s transfer of Tullow’s interests to Total and the transfer of operatorship for Block 2 followed approval by the government of Uganda after a tax agreement on October 21, 2020.
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