Tullow Oil to sell Kenyan assets for at least $120 million
Tullow Oil has signed an agreement to sell 100% of its working interests in Kenya to Gulf Energy Ltd. 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. Further announcements will be made as transaction documentation is entered by both parties.
“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,” commented Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow. “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,” Miller continued.
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 Gulf Energy Ltd as part of the transaction.
- Conditions precedent for completion of the Transaction include:
- All necessary regulatory approvals.
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.
