KAMPALA-The China National Offshore Oil Company (Cnooc) Uganda Ltd has decided against exercising its pre-emptive rights to acquiring part of the 33.33 per cent Tullow Oil stake floated to Total E&P last month.
A pre-emptive right is a contractual clause allotting a stockholder first right of refusal to acquire additional shares floated before the shares are available to the general public.
In a statement issued yesterday, Tullow Oil announced that Cnooc had communicated on Tuesday that it will not pre-empt the sale of Tullow’s assets to Total E&P.
Tullow Oil announced mid-last month the sale of its remaining stake to Total E&P for Shs2.1 trillion ($575m) for the stake, with Shs1.8 trillion ($500m) paid once the deal has been approved by government and the balance of Shs780 billion ($75m) paid whenever the Final Investment Decision (FID) has been reached.
This, in addition to Total E&P paying a “conditional” or bonus payment to Tullow when commercial oil production starts in the future, and only if a barrel of brent crude—the global benchmark for oil—will be trading upwards of Shs232,285 ($65) per barrel.
The deal attracted a paltry Shs54.6b ($14.6m) in capital gains tax, which Tullow Oil said yesterday “can now be progressed following Cnooc’s decision not to pre-empt.”
Source: DM
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