British Tullow to acquire Ghanaian EO Group

British oil and gas producer Tullow Oil plc says it has entered into a conditional agreement to acquire the entire interests in Ghana's Jubilee Oil Field of EO Group Ltd., an oil company wholly owned by two Ghanaians, for 305 million U. S. dollars in cash and shares.


The agreement, if implemented, will increase Tullow's interest in the West Cape Three Points licence offshore Ghana by 3.5 percent to 26.4 percent and its interest in the Jubilee Oil Field, which mainly operates by the company, by 1.75 percent to 36.5 percent.


"This acquisition represents an excellent opportunity to extend our interest in these high-quality assets in Ghana," Aidan Heavey, Tullow's chief executive, said in a statement issued here on Thursday.


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


Tullow said it would issue 10.14 million of its ordinary shares of 10 pence each to EO Group to satisfy about 216 million dollars of the consideration. The balance, which will include certain working capital adjustments, would be paid in cash.


This is Tullow's second deal in a week following its purchase of Nuon Exploration and Production BV for 300 million euro (424 million dollars), boosting its North Sea output by 70 percent.


Jubilee, which is mainly operated by Tullow, is pumping now about 70,000 barrels of oil a day after production started last December.


However, industrial watchers here said, the E.O Group, one of the partners with a 1.75 percent interest in Jubilee, could sell its stakes to Tullow, which would be followed by an apparent insolvency crisis being experienced by the group.


The stakes, informed sources said, could enable the EO Group offset huge debts including an amount of 61.7 million dollars which should be paid on behalf of E.O by Texas-based Kosmos Energy as its share of development capital expenditures under the West Cape Three Point Petroleum Agreement with Kosmos Ghana, Anadarko, Tullow Ghana, and Sabre Oil and Gas.


Just a day before the announcement of the purchase, Kosmos said on Wednesday it might go to court to claim the amount scheduled last December as the Ghanaian company had not shown any sign of redeeming the debt.


The EO Group is wholly owned by two Ghanaians, Mr. George Yaw Owusu, a trained environmental scientist and worked in the energy industry for about twenty years and rose to the rank of Commodity manager for Shell oil Company in the U. S., and Dr. Kwame Bawuah- Edusei. a physician trained in Ghana and specialized in family medicine in the U.S..
(Source:http://news.xinhuanet.com)