By Mikaili Sseppuya and Mark Muhumuza
The announcement last week that Tullow Oil PLC would cross list its stock on the Uganda Securities Exchange (USE) has been welcomed with enthusiasm by the industry players and investors alike.
Tullow is expected to offer about 804 million shares on the Ugandan bourse in April if negotiations are concluded.
Mr. Simon Rutega, the Uganda Securities Exchange (USE) Chief Executive said Tullow was still working on the requirements for approval. Market analysts at USE said that buying shares in the oil company would be a worthwhile investment.
“The market forces that would drive this listing would be determined by the company’s performance in its oil and gas industry,” a market analyst from MBEA research and brokerage firm said.
“Tullow is still making more oil and gas discoveries around the world especially in Africa, and it is these discoveries that have continued to keep the share price of Tullow rising,” the analyst added.
Mr. Kenneth Kitariko, the General Manager African Alliance confirmed his company will handle the cross listing of the Tullow shares on the USE.
Other analysts said such listing would raise the interest of Ugandans in the oil and gas sector considering oil is a valuable asset that cannot be easily replaced.
“It presents a wider choice in risk sharing because it is a global market,” one analyst told East African Business Week. “The same shares issued on the London exchange would be availed here minus the huddles an investor would face with problems associated with investing in an offshore firm such as foreign exchange,” the analyst adds.
This process would make it easy for Ugandans with interest in Tullow to access and acquire its shares at the prevailing share price of the oil and gas firm which is listed on both the London and Irish Stock Exchanges in the United Kingdom and Ireland, respectively.
On announcement that Tullow was considering cross listing in Uganda and Ghana, its share price at the London Stock Exchange climbed to £13.39.
The Irish Examiner on January 12th quoted the Tullow spokesperson as saying that Tullow was exploring the possibility of cross listing on the USE.
“Listing on the Uganda Security Exchange and the Ghana Stock Exchange would reflect the presence Tullow has built in the two African countries in recent years and would give local people a better chance to get on its share register and potentially share its success,”
Tullow holds interests in three licences on the Ugandan side of the Albert Rift Basin EA 1 (Block 1), EA 2 (Block 2) and EA 3 (Block 3A).
Tullow Oil also has operations in Ghana, Gabon, Mauritius, Tanzania, Congo-Brazaville, Angola, Senegal, Cote’ d’Ivoire, Liberia, Gabon, India and Europe.
Mr. Bukenya Matovu, the spokesperson of the ministry of energy said the cross listing was good news for the young petroleum sector in Uganda.
“This would address those who have been saying that the process was not transparent as Ugandans would have the chance to be part of the process and would be entitled to all the information they require as directed by the industry regulator,” he added.
In November last year, Tullow’s 50% partner in two exploration wells in Uganda’s Albertine Rift Valley Heritage Oil and Gas Limited announced that it was selling its shareholding in EA1 and EA3A to Italian firm Eni for US1.5 billion.
Tullow has up to mid this month to exercise its pre-emption rights to buy the shares at identical terms to the Italian company but indications so far have been that Tullow was looking for a partner to develop its Uganda oil fields and intended to stay in Africa for the next 20 or so years.
Tullow is currently looking for joint-venture partners to develop the Ugandan oil fields. Its officials have said that plans are under way to maintain a permanent presence in Uganda for the next 20-30 years.
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