Tullow Oil agrees to sell Kenyan operations to Gulf Energy for Sh15.5 billion

Tullow Oil Plc will sell its entire Kenyan portfolio for a minimum cash consideration of $120 million (Sh15.5 billion) to Gulf Energy Limited after an agreement.

The transaction involves Tullow Overseas Holdings BV selling 100 per cent of the shares in Tullow Kenya BV, which holds Tullow’s entire working interest in Kenya, representing approximately 463 million barrels of 2C resources.

In the context of oil and gas, "2C resources" refers to the best estimate of contingent resources, which are quantities of oil or gas that are potentially recoverable from known accumulations but are not yet considered commercially viable due to various contingencies. 

The consideration will be structured in three tranches: $40 million payable upon completion, expected in the third quarter of 2025; $40 million (Sh5.2 billion) due at the earlier of Field Development Plan approval or June 30, 2026; and $40 million (Sh5.2 billion) payable over five years from the third quarter of 2028 onwards.

In addition to the cash consideration, Tullow will be entitled to royalty payments subject to certain conditions and will retain a no-cost back-in right for a 30 per cent participation in potential future development phases.

This right can be exercised if a third-party investor participates in future development phases.

"The transaction supports our strategic priority to strengthen the balance sheet, with the first two payments totalling $80 million (Sh10.3 billion) expected before the end of the year," said Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow.

The sale is part of Tullow’s broader strategy to focus on high-margin, self-funded production assets with strong cash flows.

Along with the recently announced $300 million (Sh37.8 billion) sale of its Gabonese assets, the company expects to receive combined proceeds of $380 million (Sh49.1 billion) in 2025.

 Speaking when he confirmed the milestone, Madhan Srinivasan, Managing Director of Tullow Kenya BV (TKBV), said the signing of the SPA marks a pivotal milestone in the ongoing transaction and brings the sale closer to completion.