The Guyana government has not yet approved the transaction enacting Tullow Oil Plc’s departure from the Orinduik block. Vice President Dr. Bharrat Jagdeo told OilNOW on August 24 that Tullow has formally communicated its desire to sell its subsidiary, Tullow Guyana B.V. (TGBV), to Eco Guyana Oil and Gas (Barbados) Limited. As the Tullow subsidiary holds a 60% operating stake in the Orinduik Block, the transaction would effectively transfer Tullow’s Orinduik interest and operatorship to the Eco (Atlantic) Oil & Gas subsidiary. The government is now set to evaluate this request, the official said.
The existing equity distribution for the Orinduik Block is Tullow at the helm with a 60% operating interest, followed by Eco Atlantic at 15%, and TotalEnergies/Qatar Energy JV holding the remaining 25%.
The sale is backed by an immediate cash payment of US$700,000, directed towards Tullow Overseas Holdings B.V. (TOHBV), a Tullow subsidiary. Future payments to Tullow are contingent upon achieving certain defined milestones. Should Eco discover commercial oil within the Orinduik license boundaries, Tullow stands to gain an additional US$4 million. Moreover, the Guyana government’s issuance of a production license would pave the way for a US$10 million payout to Tullow. Furthermore, the agreement assures Tullow royalty payments from any future Orinduik production, accounting for 1.75% of the 60% working interest revenue, once capital and operational costs are adjusted.
The transaction’s expected closure is slated for late 2023.
The Orinduik Block is enviably located in close proximity to Exxon’s Stabroek Block, where the major has unlocked a Golden Lane of over 30 discoveries, amounting to more than 11 billion oil-equivalent barrels. Tullow has made two discoveries at the Joe and Jethro wells, but determined the heavy oil finds to be non-commercial.
The second and final renewal period of the Orinduik petroleum agreement started in January. Set to last three years, it requires the drilling of one exploration well. Eco Atlantic, primed to take over the operatorship, plans to initiate a farm-out process and is targeting a multi-hundred million barrel stacked pay opportunity.