Tullow Oil and Anadarko have been in the news, both inside and outside Ghana. In Ghana, things are going well for the two companies. Tullow, most notably, appears to be moving towards development of its recent Tweneboa and Enyera discoveries (translation: more commercial oil production on the way).
Outside of Ghana it’s a different story. In Uganda, Tullow is caught up in a political scandal involving corruption allegations. The Ugandan government has blocked Tullow’s sale of some of its Ugandan holdings to Total and CNOOC, pending an investigation. Tullow categorically denies the allegations, but there’s no denying that Uganda’s oil adventure does not look to be off to a good start.
When Anadarko announced a few weeks ago that it planned to sell Brazilian assets, many speculated that the company needed cash for Deepwater Horizon damages claims. Anadarko presented the planned sale as a desire to focus on North America and West Africa. Well it looks like Anadarko and BP have reached a settlement; Anadarko will pay some $4 billion to BP for Deepwater Horizon compensation and clean-up (translation: Anadarko has its share of responsibility for the Gulf of Mexico disaster; Transocean and Halliburton settlements may be coming soon). Anadarko is spinning this as a positive development — what else is the company going to do?
Anadarko is short on cash and Tullow’s cash flow certainly isn’t improving with the Uganda sale stalled. This doesn’t affect ongoing operations in Ghana, but in the event of a significant spill these companies could be quickly overwhelmed. Of course, as a number of officials have told me, the Deepwater Horizon spill was a once-in-a-lifetime tragedy, a shocking convergence of errors, an event that could never be repeated, etc., etc. While all that may be true, it’s also inevitable that spills will occur. Hopefully, spills in Ghana will be limited and small and will happen when all the involved parties have plenty of money available to deal with them…