Bharat Petroleum eyes Tullow Oil’s Kenya Acreage

India’s Bharat Petroleum Corporation (BPCL) is rumoured to be in talks with Tullow oil to acquire 10 percent stake in Blocks 10BB and 13T where the London explorer has discovered over 600 million barrels.

According to India’s Times news website reports that BPCL could be ready to cough about  $2.7 billion giving the resource a valuation of $27 billion.

The new site which quotes an anonymous source says the Indian explorer which has interest in Mozambique could be hoping to ride on the low crude oil prices.

This price is however expected to change with the next resource evaluation expected to place the valuation at over one billion barrels of oil following ongoing appraisal work.

BPCL Chairman S Vardarajan is however said to have termed the stage of the talks ‘very premature’ to talk about adding that the company was in talks with many firms all over Africa.

Tullow Oil and Africa Oil have been seeking for a new partner in their Kenyan acreage to help develop Lokichar basin reserves.

A report by Citi titled Detailed Review of Tullow’s Exploration and Production Portfolio also said that Tullow Oil financial position could delay development in East Africa unless a farm-out was effected.

“A failure to farm-out its current high equity stakes in its future developments could see a delay in the development timetable for some of these projects,” said Citi.

“Assuming no farm-outs, we see net debt/EBITDA peaking at 2.4-times in 2016 on our oil price deck (of $90 per barrel) and gearing (or net debt to equity ratio) peaking at 80 per cent in 2017,” continued the report.

Apart from BPCL National Oil Corporation Kenya’s state backed explorer is also seeking to back-in in the blocks with the corporation already seeking financing for its stake.

Tullow Oil and Africa Oil are currently operating on a one year approved extension of the exploration license in blocks 10BB and 13T following delays in acquisition of 3D seismic.