A worker walks at a Tullow Oil explorational drilling site in Lokichar, Turkana County /FILE




Tullow Oil Plc will sell its entire Kenyan portfolio for a minimum cash consideration of $120 million (Sh15.5 billion) to Gulf Energy Limited after an agreement.

The transaction involves Tullow Overseas Holdings BV selling 100 per cent of the shares in Tullow Kenya BV, which holds Tullow’s entire working interest in Kenya, representing approximately 463 million barrels of 2C resources.

In the context of oil and gas, "2C resources" refers to the best estimate of contingent resources, which are quantities of oil or gas that are potentially recoverable from known accumulations but are not yet considered commercially viable due to various contingencies. 

The consideration will be structured in three tranches: $40 million payable upon completion, expected in the third quarter of 2025; $40 million (Sh5.2 billion) due at the earlier of Field Development Plan approval or June 30, 2026; and $40 million (Sh5.2 billion) payable over five years from the third quarter of 2028 onwards.

In addition to the cash consideration, Tullow will be entitled to royalty payments subject to certain conditions and will retain a no-cost back-in right for a 30 per cent participation in potential future development phases.

This right can be exercised if a third-party investor participates in future development phases.

"The transaction supports our strategic priority to strengthen the balance sheet, with the first two payments totalling $80 million (Sh10.3 billion) expected before the end of the year," said Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow.

The sale is part of Tullow’s broader strategy to focus on high-margin, self-funded production assets with strong cash flows.

Along with the recently announced $300 million (Sh37.8 billion) sale of its Gabonese assets, the company expects to receive combined proceeds of $380 million (Sh49.1 billion) in 2025.

 

Speaking when he confirmed the milestone, Madhan Srinivasan, Managing Director of Tullow Kenya BV (TKBV), said the signing of the SPA marks a pivotal milestone in the ongoing transaction and brings the sale closer to completion.

Gulf Energy, a prominent local player in the energy sector and part of the Rubis Group, is expected to bring new financing to the project, which has been stagnant for years since Tullow Oil discovered commercially viable oil deposits in Turkana County in 2012.

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Tullow Oil has since drilled numerous wells in the Lokichar basin, estimating around 600 million barrels of recoverable crude oil. The commercialisation of these oil deposits is still in the appraisal stage, with plans for full field development, including extraction and export. 

If successful, the development could unlock significant value in Turkana’s oil reserves, estimated at over 560 million barrels of recoverable oil.

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Under the Early Oil Pilot Scheme (EOPS) completed in 2020 with Joint Venture Partners, Tullow Kenya managed to export 200,000 barrels of oil, which earned the country Sh248 million.

According to the firm, the reservoir and production data gathered during EOPS were used in the updated Field Development Plan (FDP), which intended to produce up to 120 kilobarrels of oil per day

However, the transaction is still subject to several regulatory approvals, including the Competition Authority of Kenya (CAK).

Under the UK Listing Rules, the transaction is classified as a significant transaction, and further updates are expected as the full documentation is finalised in the coming months.

Gulf Energy, a prominent local player in the energy sector and part of the Rubis Group, is expected to bring new financing to the project, which has been stagnant for years.

If successful, the development could unlock significant value in Turkana’s oil reserves, estimated at over 560 million barrels of recoverable oil.

In the Lokichar Basin, Tullow Oil Kenya has been undertaking oil explorations on Block 10BA, Block 13T and Block 10BB. The firm also holds 100 per cent stake on Block 12B in Lake Victoria Basin.