Herbert Smith advises CNOOC Ltd on acquisitions in Uganda

A joint Hong Kong, London and Paris energy team has advised CNOOC Limited on sales and purchase agreements to acquire Tullow’s one third interest in exploration areas 1, 2 and 3A in Uganda.

CNOOC Limited entered into the sale and purchase agreements (“SPA”) on 29 March 2011. This transaction is valued at approximately US$1.467 billion payable in cash, subject to closing adjustments.

The closing is subject to approvals from the relevant authorities in the Republic of Uganda and the People’s Republic of China. The closing date is likely to be the first half of 2011. In a separate parallel transaction, TOTAL S.A (“TOTAL”) also entered into agreements with Tullow to acquire a one third interest in the same exploration areas.

Upon completion of the two transactions, CNOOC Limited, Tullow Oil and TOTAL will each hold a one third interest in the exploration areas. The project partners have agreed that the operating rights will be determined separately by the Ugandan government.

The exploration areas are located in the Lake Albert Rift Basin in Uganda. Tullow estimate more than 1 billion barrels of P-50 recoverable volume of oil have been discovered since 2006. CNOOC Limited, Tullow and TOTAL are committed to coordinate and integrate development plans across all three exploration areas. It is expected that the basin-wide production rate will eventually exceed 200,000 barrels per day.

The Herbert Smith team was led by the Head of Asia energy Anna Howell, with partners David Clinch and Rebecca Major and senior associate Hilary Lau. Associates who took part in the transaction included Monica Sun, Phoebe Yuen, Robin Carvell, Marly Ohlsson, Hao Su and Roman Zakrevsky. Jason Sung and SumWai Foong advised on corporate finance matters.

Anna Howell commented:

“This world-class deal is a demonstration of our ability to advise on complex, cross border deals in multiple jurisdictions. It reinforces our status as the leading firm in the oil and gas sector and the tier one firm for Africa energy transactions.

The timeline for completing the deal was particularly challenging. We coordinated teams in our Hong Kong, London and Paris offices who worked ‘around the clock’ to ensure a successful close.”