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The Canadian exploration and production company Heritage Oil has officially confirmed that Tullow Oil, its partner in Uganda, is to exercise its option to buy the company’s entire interest in Block 1 and Block 3A for US$1.5 billion.
In a statement Heritage said that Tullow agreed to the same terms and conditions as the Italian supermajor Eni had offered and which initially triggered the clause in the contract.
“Completion of the transaction remains subject, inter alia, to approval by the Ugandan government. The Government will determine which transaction to approve (either the acquisition by Eni or Tullow’s pre-emption of such acquisition) in its role as final arbiter,” the statement said.
Heritage decided to sell the blocks at Lake Albert to Eni after deciding that they were too expensive to develop due to the remote location of both fields. It is thought that the company would invest the money in its fields in Iraqi
Kurdistan as well as pay a special dividend to shareholders.
Heritage has invested $150 million drilling six wells in Uganda and the company’s share of the oil amounts to around 300 million barrels.
