Tullow Oil and Total E&P Uganda have entered a sale and purchase agreement that has Tullow farming down a substantial slice of its assets in Uganda, Petroleum Africa reported.

Tullow has agreed to transfer 21.57% of its 33.33% interests in Exploration Areas 1, 1A, 2 and 3A to Total for a sum consideration of $900m, informed Interactive Investor.

This agreement will allow Tullow to retain an 11.76% interest in the upstream and pipeline, which would reduce to 10% when the government of Uganda formally exercises its right to back-in.

The total consideration for the transaction consists of $100m upon completion of the transaction, $50m at both final investment decision and first oil, and $700m in deferred consideration, which will be used by Tullow to fund the company’s share of the costs of the upstream development project and the associated export pipeline project.

Completion of this transaction is subject to certain conditions, including the approval of the government of Uganda. Once this transaction has completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position.