Tullow Oil PLC has agreed with Gulf Energy Ltd to sell Tullow Kenya BV, which holds Tullow’s working interests in Kenya. The deal is valued at Ksh 15.6 billion (US$120 million) or more. The payment will be structured in three phases: an initial Ksh 5.2 billion (US$40 million) payable upon completion, a second instalment of Ksh 5.2 billion (US$40 million) due upon Field Development Plan (FDP) approval or by 30 June 2026 (whichever comes first), and a final Ksh 5.2 billion (US$40 million) payable over five years from Q3 2028.
Tullow will also receive conditional royalty payments and retain a no-cost back-in right for 30% participation in future development phases. The transaction, conducted through Tullow’s wholly-owned subsidiary, Tullow Overseas Holdings BV, is expected to improve equity and leverage metrics, supporting the company’s debt reduction efforts.
“This transaction constitutes a significant transaction under UKLR 7 of the UK Listing Rules, which came into effect on 29 July 2024. Further announcements will follow upon execution of full transaction documentation,” Tullow stated.
Gulf Energy will assume all historical and future liabilities under the agreement. Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow, commented:
“Today’s announcement marks another step in Tullow’s debt reduction strategy, with near-term cash receipts of US$80 million and reduced capital exposure, while retaining a significant option for future project development. I am confident that the proceeds from this transaction, combined with the US$300 million from our Gabonese asset disposal, place the company in a strong position for successful refinancing.
“We look forward to working with Gulf Energy, which possesses the necessary financial resources to complete the transaction and is a strong, credible counterparty. In doing so, we aim to unlock significant value for the people of Kenya.”
Tullow’s oil fields in Kenya have remained undeveloped since the discovery of commercially viable reserves in Turkana in 2012, hindered by various commercial, political, technical, and environmental challenges.
In 2023, joint venture partners TotalEnergies and Africa Oil exited the multi-billion-dollar South Lokichar project, leaving Tullow as the sole operator. The Kenyan government subsequently rejected the Tullow FDP, citing concerns over its financial capacity. Although Tullow had aimed to commence oil exports by 2028, the sale of its Kenyan operations marks the end of that ambition following extended efforts to secure a strategic partner.
