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.
