Tullow Sells Entire Kenya Stake to Gulf Energy in $120M Deal » Capital News
NAIROBI, Kenya, Apr 15 — Tullow Oil Plc has signed a major agreement to divest its entire Kenyan operations in a move that marks the company’s complete exit from the East African country.
The deal, valued at a minimum of $120 million, was reached between Tullow’s wholly-owned subsidiary, Tullow Overseas Holdings BV, and Gulf Energy Ltd, a prominent regional energy firm.
Under the terms of the transaction, Tullow will sell Tullow Kenya BV — the entity holding all its Kenyan assets — to Gulf Energy.
The agreement, currently at the heads of terms stage, includes both immediate and deferred payments, as well as a future royalty structure and a conditional back-in right for Tullow.
3 tranches
The consideration will be paid in three main tranches comprisng USD40mn each.
Tranche A will be paid upon completion of the transaction, Tranche B upon approval of the Field Development Plan (FDP) or by June 30, 2026 — whichever comes first, and Tranche Cspread across quarterly payments beginning Q3 2028, contingent on a minimum average Brent crude price of $65 per barrel.
Any outstanding balance will be paid as a lump sum by June 2033.
Tranche D will entail additional quarterly royalty payments of $0.5 per barrel, calculated on 80 per cent of total production, subject to oil price and production thresholds.
Tullow also retains a 30 per cent back-in right, at no cost, for participation in any future development phases, before any government share is factored in.
Strategic Shift
Richard Miller, Tullow’s Chief Financial Officer and Interim CEO, called the deal a “key milestone” in the company’s strategy to reduce debt and sharpen focus.
“Today’s announcement marks another step forward in Tullow’s accelerated deleveraging journey with near-term cash receipts of $80 million and mitigating significant capital exposure, whilst retaining a material option on the future development of the project,” Miller stated.
He added that the proceeds, combined with the recent $300 million divestiture of Tullow’s assets in Gabon, would significantly strengthen the company’s balance sheet ahead of a planned refinancing effort.
Next Steps
With this deal, Gulf Energy is set to take over all of Tullow’s current and future liabilities related to the Kenyan operations.
The transaction must still clear several hurdles, including regulatory approvals from relevant Kenyan authorities, payment guarantees for future tranches, and finalization of a detailed Sale and Purchase Agreement (SPA), expected in the coming months.
Completion is anticipated within 2025, marking the formal transfer of Tullow’s interests — including its stake in the South Lokichar oil project — to Gulf Energy.
Tullow had long been the lead player in Kenya’s quest to become a crude oil producer, but slow progress in commercializing discoveries and shifting corporate priorities have seen it gradually scale back its involvement.
The transaction now puts Gulf Energy in the driver’s seat for one of Kenya’s most significant energy developments.
“We look forward to working with Gulf Energy, who have the requisite financing to complete the transaction and are a strong and credible counterparty, and by doing so, unlock material value for the people of Kenya,” said Miller.