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Tullow Oil plc has announced plans to fully exit its Kenyan operations in a landmark transaction with Nairobi-based Gulf Energy Ltd.
In a statement released Tuesday, the British oil explorer revealed that its subsidiary, Tullow Overseas Holdings BV, has signed a deal with Gulf Energy to sell its entire stake in Tullow Kenya BV for a minimum total consideration of $120 million.
The deal, structured in multiple tranches, includes a $40 million upfront payment due upon completion.
Another $40 million will be due by June 30, 2026 or upon Field Development Plan (FDP) approval, whichever comes first, and a final $40 million to be paid gradually between 2028 and 2033.
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Tullow will also be entitled to royalty payments based on future production and oil price conditions.
Importantly, all past and future liabilities related to the Kenyan assets will transfer to Gulf Energy, which will now take the lead in potentially unlocking Kenya’s oil reserves for commercial production.
“Today’s announcement marks another step forward in Tullow’s accelerated deleveraging journey,” said Richard Miller, Tullow’s Chief Financial Officer and Interim CEO.
“With near-term cash receipts of $80 million and reduced capital exposure, this deal positions us well for successful refinancing while maintaining an option to re-enter the project.”
Tullow retains a 30% back-in right, allowing it to participate in any future development phases at no cost.
The deal is subject to regulatory approvals, satisfactory payment guarantees, and the finalisation of a full Sale and Purchase Agreement (SPA), which the parties aim to complete in the coming months.
Completion and the first payment are expected in 2025.
The move also aligns with Tullow’s broader financial strategy, following a $300 million asset disposal in Gabon, and further strengthens its balance sheet by accelerating debt reduction.
Tullow’s exit effectively ends its longstanding involvement in Kenya’s oil exploration sector, which began with early discoveries in the Lokichar Basin over a decade ago.
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The handover to Gulf Energy could breathe new life into stalled efforts to develop the country’s crude oil resources for export and local use.
“We look forward to working with Gulf Energy, who have the requisite financing and credibility to unlock material value for the people of Kenya,” Miller added.
The transaction constitutes a significant deal under the UK Listing Rules and underscores shifting dynamics in Kenya’s oil and gas sector as domestic players take the reins in driving future exploration and development.