Exploration company Tullow Oil said the $500m sale of its assets in Uganda to Total has been completed today.
Tullow is also due to receive a further $75m when a final investment decision is taken on the development project plus contingent payments linked to the oil price payable after production commences.
Although Tullow will retain a financial link to the development project through the potential contingent payments, the closing of this deal marks Tullow’s exit from its licences in Uganda after 16 years of operations in the Lake Albert basin.
Tullow in April agreed to sell its onshore oil fields in Uganda to Total as part of its efforts to raise $1 billion this year to reduce its $2.8 billion of debt.
Tullow, founded in the 1980s to tap into African oil and gas, suffered a series of technical difficulties and missed production targets, leading its chief executive to step down late last year.
Now, along with the entire oil industry, it faces unprecedented turmoil in the oil markets as lockdowns to contain the new coronavirus have wiped out demand.
The international oil price has also lost roughly two thirds of its value since the start of the year.
Money from the sale will be used to reduce Tullow’s net debt, strengthening the balance sheet and moving Tullow towards a more conservative capital structure, it said.