Tullow Oil PLC on Monday said it increased its interest in the Jubilee and TEN fields in Ghana for $118 million via a pre-emption right.

Tullow exercised its rights over the sale by US oil firm Occidental Petroleum Corp of its interest to Kosmos Energy Ltd. In October last year, Kosmos had agreed to acquire an additional 18% stake in the Jubilee field and an additional 11% interest in the TEN fields in Ghana from Occidental Petroleum Corp for $550 million.

Tullow, which is a West Africa-focused oil and gas producer, pre-empted that deal and now has equity interests of 38.9% in the Jubilee field and to 54.8% in the TEN fields, both of which it operates, adding around 5,000 barrels of oil to its daily production.

Tullow subsequently increased its production guidance for 2022 to between 59,000 and 65,000 barrels of oil per day. Its previous guidance was 55,000 to 61,000 barrels a day.

Tullow shares were up 4.8% to 50.04 pence each in London on Monday morning. Kosmos shares were down 2.1% to 463.91p each.

Kosmos said separately that South Africa’s national oil company, PetroSA, also is in the process of exercising a pre-emption right on the two assets for around $10 million.

Following the transactions, Kosmos’ interest in Jubilee will be reduced by 3.8 percentage points to 38.3% while its interest in TEN will be reduced by 8.3 points to 19.8%.

Kosmos is a Texas-based deep water oil exploration and production company with assets in Ghana and the US.

The net 2022 production impact of the pre-emption exercise for Kosmos is a reduction of around 4,000 barrels of oil per day and is expected to result in one less Ghana cargo lifting this year and a reduction in 2022 capital expenditure of about $30 million.

Hargreaves Lansdown Equity Analyst Laura Hoy said: ‘Tullow are making good on plans to expand its Ghana operations with an increased stake in two key fields and are taking advantage of buoyant oil prices, aiming to up production and get a larger slice of the growing pie.

‘Given the supply constraints at the moment, things shouldn’t drop off anytime soon and this should help Tullow recoup the cost of the investment, and then some, relatively quickly. However that’s entirely dependent oil prices, so volatility can’t be ruled out.’

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