Tullow signs Ksh.15.5B Kenya assets sale deal with Gulf Energy

Tullow Oil is moving closer to exiting its Kenyan operations, announcing Monday the signing of a sales and purchase agreement with Gulf Energy.

The U.K.-listed oil and gas explorer in April agreed to sell its local oil deposits to Nairobi-based Gulf Energy for at least $120 million (Ksh.15.5 billion) as it strives to reduce its debt.

Madhan Srinivasan, managing director of Tullow Kenya BV, confirmed the signing of the agreement with Gulf affiliate Auron Energy E&P Ltd. in a statement.

Tullow’s disposal of its Kenyan oilfields comprises an initial payment of $40 million this year upon completion of the sale, with the remainder spread over subsequent years.

The company will be entitled to royalty payments and have the right to 30 percent participation in potential future development phases at no cost, per the transaction details shared with the media.

Since the first commercial discovery of oil in Turkana County in 2012, Tullow has struggled to bring it into full production; among the challenges has been finances to build a heated pipeline down to the coast, which any export route would require.

Additionally, in May 2023, Tullow’s license partners in the Lokichar oilfield, TotalEnergies and Africa Oil Corp, withdrew, leaving the British firm as its sole owner.

Talks with Indian state-run companies on a possible sale did not result in a deal.

Tullow, which had a net debt of around $1.5 billion at the end of last year, has been working to bring it below $1 billion.

The multinational in March agreed to sell its working interests in Gabon for $300 million in cash.

“Coupled with the sale of our Gabonese assets, the disposal of these non-core assets is expected to provide cash proceeds of $380 million in 2025,” Tullow’s CFO and interim CEO, Richard Miller, said in the Monday statement.