Tullow Oil | Kenya disposal on attractive terms
Tullow has announced the disposal of its Kenyan assets for US$120m plus potential future royalties and retains a zero-cost back-in right for 30%. The disposal should cut leverage by around 10%, further improving the chances of completing a successful refinancing while removing the drain on management time and cost involved in endeavouring to achieve a commercial development. We were carrying a de-minimis US$9m risked NAV10 worth 1p per share in our valuation for Kenya so the disposal is at a large premium and takes our risked NAV10 to 61p/share (from 56p) which compares with the current share price of 14p.Tullow Oil is an independent oil and gas exploration and production company. Co.'s focus is on finding oil in Africa and South America. Co.'s primary activities include targeted exploration and appraisal, selective development projects and growing its production. As of Dec 31 2017, Co.'s portfolio included 90 licences in 16 countries. Co.'s operations are organized into three business delivery teams: West Africa; East Africa; and New Ventures. As of Dec 31 2017, on a working interest basis, Co. had commercial reserves of 245.7 million barrels of oil, 268.90 billion cubic feet of gas, and 290.5 million barrels of oil equivalent (petroleum).
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