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KENYA: Gulf Energy Acquires Tullow Oil Kenyan Assets Portfolio for $120M

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Tullow Oil plc (Tullow) has announced that its wholly-owned subsidiary, Tullow Overseas Holdings BV, has signed a heads of terms agreement with Gulf Energy Ltd to sell Tullow Kenya BV, which holds Tullow’s entire working interests in Kenya, for a total consideration of at least $120 million.

The consideration will be split into a $40 million payment due on completion, $40 million payable at the earlier of Field Development Plan (FDP) approval or 30 June 2026, and $40 million payable over five years from the third quarter of 2028 onwards. In addition, Tullow will be entitled to royalty payments subject to certain conditions. Tullow also retains a back-in right for a 30% participation in potential future development phases at no cost.

The Transaction is accretive to both equity and leverage and further accelerates Tullow’s deleveraging process.

Transaction highlights

  • Minimum cash consideration of $120 million, with additional royalty payments subject to certain conditions.
  • Tullow retains a back-in right for a 30% participation (before Government back-in) in potential future development phases at no cost.
  • Corporate sale of Tullow’s entire Kenyan portfolio of assets.
  • All past and future liabilities will be transferred to the Buyer as part of the Transaction.
  • Conditions precedent for completion of the Transaction include:
    • All necessary regulatory approvals.
    • Delivery of payment guarantees satisfactory to Tullow in relation to Tranche B and C (see Consideration Structure).
  • ​​​​​​Entering into the full sale and purchase agreement (SPA) is targeted within the coming months with completion of the Transaction and receipt of first payment during 2025.

Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow, commented:

“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. I am confident that the proceeds from this transaction, coupled with the $300 million from the disposal of our assets in Gabon, position the business strongly for a successful refinancing.

“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.”

Consideration structure

  • Total consideration of $120 million, consisting of:
    • Tranche A: $40 million payable on Transaction completion.
    • ​​​​​Tranche B: $40 million payable at the earlier of FDP approval or 30 June 2026.
    • ​Tranche C: $40 million payable no later than 30 June 2033, subject to the following payment schedule:
      • Payments of $2 million per quarter starting in the third quarter of 2028, provided Dated Brent oil price averaged at least $65/bbl during the preceding quarter.
      • If $40 million in aggregate has not been paid by 30 June 2033, the remainder will be due to Tullow as a bullet payment at that point irrespective of the prevailing oil price.​​​​​​​​​​​​​​​​​​​​​​
    • Tranche D: Quarterly royalty payments of $0.5/bbl multiplied by 80% of total production, subject to oil price, resource and production related conditions.

Tullow Oil had 3 licences in Kenya covering >23,900 (sq km) in acreage acreage with 1 basin opened – South Lokichar Basin (blocks 10BB and 13T). To date the company has discovered 463MMBL net 2024 2C in recoverable resources. The sale follows earlier withdrawals by Tullow Kenya B.V. two minority partners Africa Oil and TotalEnergies from Blocks 10BB, 13T and 10BA in the South Lokichar Basin for differing internal strategic reasons. 

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