Tullow Oil has announced plans to divest its Kenyan unit to Gulf Energy, a move that marks a significant step in its ongoing efforts to reduce debt and refocus its portfolio. The two firms have signed a heads of terms agreement valued at approximately Ksh 15.5 billion ($120 million), with the consideration set to be paid in three tranches through to 2028.
Under the agreement, Gulf Energy will make an initial payment of $40 million upon completion of the transaction. A second tranche of $40 million will follow upon the earlier of the Field Development Plan (FDP) approval or by June 30, 2026. The remaining $40 million will be paid in equal installments over five years, starting from the third quarter of 2028.
Tullow’s Chief Financial Officer and Interim CEO, Richard Miller, welcomed the agreement as a critical milestone in the company’s strategy to accelerate deleveraging. “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,” said Miller.
The deal will also see Tullow retain a back-in right for a 30 percent stake (prior to the Kenyan government’s participation) in any future development phases at no additional cost. This ensures Tullow maintains a strategic interest in Kenya’s oil development potential.
The company expects to receive the first payment later this year, once the final purchase and sale agreement is concluded in the coming months. The deal comes after Tullow’s recent disposal of assets in Gabon for $300 million, further strengthening its financial position ahead of a planned refinancing effort.
Miller also expressed confidence in the new partner, Gulf Energy, saying, “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.”
The transaction is expected to bring renewed momentum to Kenya’s long-stalled oil project in the South Lokichar basin.
