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Tullow Oil, Total And CNOOC's Uganda Deal Terminated

Tullow Oil Plc.'s (TLW.L) sale of a stake in its project in Uganda to Total and CNOOC has been terminated due to a tax dispute with the Ugandan authorities, the companies said.

In 2017, Total and Tullow entered into a Sale and Purchase Agreement whereby Total would acquire 21.57% out of Tullow's 33.33% interest in the Lake Albert licenses. CNOOC exercised its right to pre-empt 50% of the transaction. As a result, Total and CNOOC would have each increased their interest to 44.1% while Tullow would have kept 11.8%.

Total said, "the deadline for closing the transaction has been extended several times, clearly demonstrating the endeavors of the parties to find an agreement. The final deadline will be reached at the end of today, August 29, 2019, and as such, the Acquisition Agreement will be automatically terminated."

Total noted that its interest will therefore remain at 33.3% on blocks EA1, EA2 and EA3 prior to the 15% national company back-in, Total being operator of the block EA1 which contains the largest part of the reserves. Total keeps the right to pre-empt any future transactions, in case any party divests part or all of its interest.

Tullow today said it will now initiate a new sales process to reduce its 33.33% Operated stake in the Lake Albert project which has over 1.5 billion barrels of discovered recoverable resources and is expected to produce over 230,000 bopd at peak production.

The Joint Venture Partners had been targeting a Final Investment Decision for the Uganda development by the end of 2019, but the termination of this transaction is likely to lead to further delay.

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