Tullow (TUWOY) Granted Approval for Uganda Asset Divestment
Tullow Oil PLC TUWOY obtained approval from the Government of Uganda to sell off a $575-million stake in an oil project to TOTAL S.A. TOT.
Tullow has been expecting to sell its stake in the Lake Albert Development Project since 2017. However, several attempts for the stake sale were repeatedly intervened by tax disagreements. Tullow sought relief with creditors this year to avoid violating debt covenants, while securing proceeds from the sale became crucial to restore the firm’s stability. Tullow mentioned previously that if the sale failed to be completed, it would proceed with alternative refinancing solutions to avoid financial restructuring.
The company also received approval from the Ugandan Minister of Energy and Mineral Development. Earlier, Tullow’s plan to sell a stake in the oil project to TOTAL and CNOOC Limited CEO failed as a result of a holdup around tax negotiations.
Upon the completion, Tullow will receive $500 million in cash and an additional $75 million after a final investment decision on the development project is made. Further, the company is authorized to receive contingent payments related to the oil price once the production starts. With the accomplishment of all government-related conditions for the completion of the deal, Tullow expects the deal to end within the next few days, post the completion of certain customary pre-closing steps with TOTAL.
Company Profile & Price Performance
Headquartered in London, U.K., Tullow is a hydrocarbon producer and explorer with the main focus on Africa.
Notably, the company’s shares have outperformed the industry in the past six months. Its stock has lost 5.1% compared industry’s 20.9% decline in the said timeframe.
Zacks Rank & Stock to Consider
Tullow currently carries a Zack Rank #4 (Sell).
One better-ranked player in the energy space is DCP Midstream Partners LP DCP, sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
DCP Midstream is expected to see earnings growth of 165.3% in 2021.
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CNOOC Limited (CEO) : Free Stock Analysis Report
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