Tullow to acquire EO Group's Ghanaian interests

On Thursday 26th May, Tullow announced that it was going to acquire EO Group's interests in offshore Ghana, for a combined share and cash consideration of $305 million. The acquisition will increase the company's interest in the West Cape Three Points licence by 3.5 per cent to 26.4 per cent and the company's interest in the Jubilee Oil field by 1.75 per cent to 36.5 per cent.

The date of the transaction is 1st December 2010. The agreement is conditional on the receipt of various approvals and assurances, including from the Government of Ghana. Upon completion, an application will be made to the UK Listing Authority and the Irish Stock Exchange for the shares to be admitted to the official list bodies.

Speaking about the deal, Tullow's Chief Executive Aidan Heavey said: “This acquisition represents an excellent opportunity to extend our interest in these high-quality assets in Ghana. Following our exploration and production successes over the last few years, which culminated in First Oil in late 2010, this purchase further demonstrates Tullow's long-term commitment to Ghana and our belief in its significant remaining potential.”

For more news and expert analysis about Ghana, please see Ghana Politics & Security.

President Mills inaugurates Ghana's first oil

Ghana has finally joined a host of oil exporting African nations by pumping its first commercial oil after the discovery of the offshore Jubilee field in 2007. President John Atta Mills opened the valves, in a televised inauguration ceremony, at the 330 metre long platform off the country's Atlantic coast.

A consortium led by Tullow will aim to produce around 55,000 b/d increasing it to up to 120,000 b/d within the next six months. The initial production output is expected to double within three years. Ghana's is likely to earn in the region of $400 million in the first year.

Ghana's Energy Minister Joseph Oteng-Adjei said that the government has ensured that the country benefits from its oil wealth, adding “Ghana has taken various decisions, which proves that we are not going the path of other countries. We've also put down some basic rules to ensure transparency in the management of the revenue that will come out of this natural resource.”

The government has been deliberating legislation to safeguard the country's oil industry – and avoid the pitfalls faced by nearby Nigeria – but it is yet to put the laws in place.

Speaking before the inauguration ceremony, President Mills assured Ghanaians that oil wealth would be distributed fairly across the board. Reiterating his reassurance from earlier in the year Mills said, "I'd also wish to restate that revenue from the oil will be used for the benefit of all, and not the benefit of a few."

The government has estimated that the oil will boost Ghana's economic growth rate from 5 per cent this year up to 12 per cent by next year, with oil production bringing in around $1 billion in revenue. The Jubilee field, 60km of Ghana 's Atlantic coast, is estimated to hold up to 1.5 barrels of oil. A second offshore field, discovered in September, is also estimated to contain up to 1.4 billion barrels oil.

Sources: BBC News, Reuters, Voice of America

For more news and expert analysis about Ghana, please see Ghana Politics & Security.