OIL explorer Tullow is buying 50 per cent stakes in six exploration licences in Kenya and Ethiopia as the hunt for oil in East Africa gathers pace.
Tullow said yesterday the positions it is acquiring are in the East African Rift Basin, which has a similar geology to Uganda’s Lake Albert Rift Basin where it has discovered oil fields big enough to turn Uganda into a top-50 oil producer.
London-listed Tullow will become the operator of five licences as part of a deal with Canadian explorer Africa Oil Corp, building on a farm-in agreement on a sixth block in the same region announced in August with Canada’s Centric Energy.
Interest in East Africa, which is much less explored than West Africa, has been rising on the back of Tullow’s Ugandan discovery and a gas find by US firm Anadarko off the coast of Mozambique in February.
Oil major Exxon Mobil and BG Group both farmed into Tanzanian blocks earlier this year, while explorer Afren in June bought a Canadian company with 12 blocks in Ethiopia, Kenya, Madagascar and the Seychelles.
Under the terms of the deal, which is subject to formal government approvals, Tullow said it would reimburse pro-rata past costs in each block and pay Africa Oil’s future costs up to $23.75m (£15.4m).
Shares in Tullow closed down four per cent at £11.85 yesterday.
City A.M. Reporter