Tullow Oil seeks M&A opportunities across Africa - exec
16 OCT 2018
Tullow Oil [TLW: LSE], a London-headquartered, Africa-focused oil and gas group, is scouting targets across Africa, New Ventures Africa General Manager Robin Sutherland said.
It is looking for growth opportunities in the continent, with West Africa as its key target region, Sutherland said on the sidelines of the Future Energy Africa conference in Cape Town.
Tullow Oil is keen to acquire anywhere between a minority stake upwards to entire companies, public or private, he said.
It is seeking oil and gas companies operating either in the upstream, midstream or downstream, production assets, exploration acreage and projects among other industrial players aligned to its business, Sutherland said.
The company does not have a set amount to back new acquisitions, but it has a USD 150m budget to fund frontier and greenfield exploration deals next year, Sutherland said. It will use its own balance sheet, shareholder funding and, if necessary, “very” minimum debt to fund M&A transactions, he added.
Neither does it have a specific timeframe to close an acquisition, but aims to complete some transactions between now and beyond 2020, Sutherland said.
Management is conducting the process starting with scouting targets, Sutherland said. It welcomes advances from prospective targets, third parties and advisers with target suggestions, he added.
While its in-house team has the capacity to handle the entire process, Tullow Oil could consider mandating external advisers once executives have concluded their due diligence exercises, he said.
Tullow is well placed to build on this strong financial platform in 2018, according to company reports. Its balance sheet was stronger at the start of 2018 following the USD 0.75bn rights issue, strong free cash flow generation of USD 543m and delivery of key objectives, including the successful USD 2.5bn refinancing, according to company reports.
In the 2017 financial year, Tullow Oil posted USD 1.7bn in revenues, while gross profit was USD 815m, the company said in a results statement. Additionally, the company had free cash of USD 1.1bn and a gearing ratio of 2.6x, the company said.
In 2004, it acquired Energy Africa, a South Africa-based oil and gas exploration company, for USD 500m, Sutherland said.
Tullow Oil’s New Ventures division is responsible for frontier exploration activity across Africa and South America. Its key activities include acquiring new acreage. Besides South Africa, in Africa it has interest in offshore Namibia, Côte d’Ivoire, Zambia, Mauritania, Ghana Kenya, Uganda and Tanzania.
Tullow Oil has interest in more than 120 exploration and production licences across 22 countries within in Africa, Europe, South Asia and South America. It produces 60,000 barrels of oil per day, according to company reports.
Additional to M&A, its strategy includes entering into farm-in-agreements, strategic alliances and other structures that can be tailor-made, Sutherland said. The company is pursuing new opportunities to bolster its assets base, diversify risk and complement its organic growth, he added.
Tullow Oil was founded in 1985 by Aidan Heavey. It has offices in Ireland, Ghana, Kenya, Uganda and South Africa.
It has a workforce of 2,000 plus.