Tullow Oil has agreed to sell its assets in Kenya to Gulf Energy, a leading Kenyan energy and infrastructure group, for $120 million, the company announced Tuesday.
Tullow’s entire working interests in the East African nation are held by the subsidiary Tullow Kenya BV.
The sale is structured for the London-listed exploration firm to get $80 million near-term cash receipts and a back-in right for 30 percent of potential future developments at no cost.
“The consideration will be split into a $40 million payment due on completion, $40 million payable at the earlier of Field Development Plan (FDP) approval or 30 June 2026, and $40 million payable over five years from the third quarter of 2028 onwards,” Tullow announced in a statement on its website.
“In addition, Tullow will be entitled to royalty payments subject to certain conditions. Tullow also retains a back-in right for a 30 percent participation in potential future development phases at no cost,” it added.
The transaction is accretive to both equity and leverage and further accelerates Tullow’s deleveraging process.
“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. I am confident that the proceeds from this transaction, coupled with the $300 million from the disposal of our assets in Gabon, position the business strongly for a successful refinancing,” said Richard Miller, Tullow’s chief fiinancial officer and interim chief executive.
“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,” he added.
