Tullow Oil Seals $120 M Deal For Kenya Assets Sale To Gulf Energy

UK-based oil and gasoline firm Tullow Oil Plc is shifting nearer to exiting its Kenyan operations following the signing of a gross sales and buy settlement (SPA) with Gulf Energy Limited.

Tullow Oil, in a press launch on Monday, July 21, introduced that its wholly owned subsidiary, Tullow Overseas Holdings BV, has signed an SPA with Auron Energy E&P Limited, an affiliate of Gulf Energy Ltd.

Gulf Energy Ltd shall act as guarantor for the purchaser for the sale and buy of 100% of the shares in Tullow Kenya BV, which holds Tullow’s complete working pursuits in Kenya, for a minimal money consideration of $120 million (Ksh15.5 billion), topic to customary changes.

The consideration might be cut up right into a $40 million fee due on completion, $40 million payable on the earlier of Field Development Plan (FDP) approval or 30 June 2026, and $40 million payable over 5 years from the third quarter of 2028 onwards.

In addition, Tullow might be entitled to royalty funds topic to sure situations.

Tullow Oil indicators SPA for strategic sale of Kenyan property to Gulf Energy Ltd

The firm additionally retains a back-in proper for a 30% participation in potential future growth phases at no historic price.

This proper might be exercised if a third-party investor participates in future growth phases, whether or not via a sale or farm-down of the purchaser’s curiosity within the property.

“We are happy to announce the signing of the Kenyan SPA, marking one other step nearer to completion of the Transaction with Gulf Energy. For a complete consideration of at the very least $120 million, the Transaction helps our strategic precedence to strengthen the steadiness sheet, with the primary two funds totalling $80 million anticipated earlier than the top of the 12 months,” mentioned Richard Miller, Chief Financial Officer and Interim Chief Executive Officer, Tullow.

“Furthermore, we’re happy to retain a probably materials zero price worth choice to take part in future growth phases.”

Miller added that the corporate continues to advance plans to optimize its capital construction throughout 2025.

Coupled with the sale of Tullow Oil’s Gabonese property, the CEO mentioned that the disposal of those non-core property is anticipated to supply money proceeds of $380 million in 2025.

Net proceeds from the transaction might be used to strengthen Tullow’s steadiness sheet by materially lowering Tullow’s web debt, and the transaction is due to this fact anticipated to scale back the chance related to a holistic debt refinancing anticipated in 2025.

Information on the disposed of property

The disposed property comprise all of Tullow’s working pursuits in Kenya, the place vital found oil sources are progressing in the direction of growth within the South Lokichar Basin in Turkana County.

Tullow has undertaken exploration and appraisal of the property as a part of the longer-term growth goal since 2011.

Since the primary industrial discovery of oil in Turkana County in 2012, the corporate has struggled to carry it into full manufacturing.

Among the challenges has been the funds to construct a heated pipeline right down to the coast, which any export route would require.

Additionally, in May 2023, Tullow’s license companions within the Lokichar oilfield, Africa Oil Corp and TotalEnergies, withdrew, leaving the British agency as its sole proprietor.

Talks with Indian state-run firms on a attainable sale didn’t lead to a deal.