Tullow Oil has officially signed an agreement to sell its entire working interests in Kenya to Gulf Energy Ltd. for a minimum consideration of $120 million.
The deal, which is part of Tullow’s broader financial repositioning efforts, marks a major shift in the ownership and development prospects of Kenya’s oil resources.
Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow, emphasized the significance of the transaction in strengthening the company’s financial position.
“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.”
Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow
According to Tullow, the sale will be structured in stages, including an initial $40 million payment upon transaction completion, another $40 million payable upon the earlier of Field Development Plan (FDP) approval or 30 June 2026, and a final $40 million paid out over five years starting from Q3 2028.
The deal is described as accretive both in terms of equity value and reducing leverage, with the initial $80 million injection expected to bolster Tullow’s liquidity and enhance its creditworthiness ahead of its planned refinancing efforts.
The agreement also includes provisions for royalty payments, dependent on certain conditions being met, and a back-in right for Tullow to reclaim 30% participation in future development phases at no cost.
The transaction is subject to regulatory approvals and the finalization of the sale and purchase agreement (SPA), which is expected in the coming months. Completion of the deal and receipt of the first payment are anticipated during 2025.
Kenya’s oil reserves, particularly in the South Lokichar Basin, have long been viewed as a promising frontier for development.
However, delays in infrastructure and regulatory challenges have slowed progress. Gulf Energy’s involvement could revitalize efforts to commercialize these reserves.
Gulf Energy’s Future Prospects
Gulf Energy Ltd., a leading Kenyan energy and infrastructure firm, is expected to inject new momentum into Kenya’s oil sector.
The company has a strong presence in East Africa’s petroleum supply chain and is well-positioned to advance oil development in the South Lokichar Basin.
“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.”
Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow
The deal also transfers all past and future liabilities linked to the Kenyan assets to Gulf Energy, easing financial pressure on Tullow.
The sale has sparked discussions within the oil and gas industry, with analysts viewing it as a strategic move for both parties.
Tullow Oil’s exit from Kenya reflects a broader trend of international firms reassessing their African portfolios amid shifting market dynamics.
“This transaction significantly reduces our capital exposure while preserving long-term upside.
“With this and the $300 million recently raised from the Gabon sale, we are in a stronger position ahead of our planned refinancing.”
Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow
Meanwhile, Gulf Energy’s acquisition signals confidence in Kenya’s oil potential. The company’s expertise in infrastructure and petroleum supply could play a crucial role in unlocking value from the South Lokichar Basin.
As Tullow Oil transitions out of Kenya, Gulf Energy steps in to take the reins of one of the country’s most high-profile oil projects.
The structured payment plan, royalty agreements, and back-in rights ensure that both companies remain strategically positioned for future developments.
With regulatory approvals pending and the SPA expected soon, the industry will be watching closely to see how this deal unfolds.
If successful, it could mark a turning point for Kenya’s oil ambitions and reinforce Gulf Energy’s role as a key player in East Africa’s energy landscape.
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