Tullow Oil plc has reached a significant milestone in its asset portfolio restructuring with the signing of a heads of terms agreement to divest its Kenyan interests for a total minimum consideration of $120 million.

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The agreement, made through its wholly-owned subsidiary Tullow Overseas Holdings BV, will see Tullow transfer full ownership of Tullow Kenya BV—holder of its entire working interests in Kenya—to Gulf Energy Ltd, a major player in East Africa’s energy sector.

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The consideration for the deal will be structured in three main tranches: an initial $40 million payment upon completion, another $40 million at the earlier of Field Development Plan (FDP) approval or by June 30, 2026, and a final $40 million payable over five years beginning in Q3 2028. Additional royalty payments may be made under specified conditions.

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Importantly, Tullow retains a back-in right for a 30% participation in future development phases of the project, without incurring any cost. The deal also includes the full transfer of past and future liabilities to the Buyer.

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The transaction, once completed, is expected to support Tullow’s ongoing efforts to strengthen its financial position.

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“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 Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow. “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.”

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The full sale and purchase agreement is expected to be finalized in the coming months, with transaction completion and the first payment anticipated in 2025. As required under the UK Listing Rules, the transaction qualifies as a significant deal, and further updates will be issued once final documentation is signed.

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Key terms of the deal include: Tranche A: $40 million upon completion

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Tranche B: $40 million at FDP approval or by June 30, 2026

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Tranche C: $40 million to be paid in quarterly installments of $2 million starting Q3 2028, contingent on Brent oil prices averaging at least $65/bbl in the preceding quarter. Any outstanding balance by June 30, 2033, will be settled as a lump-sum bullet payment regardless of oil price.

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Tranche D: Royalty payments of $0.5 per barrel, applied to 80% of total production, dependent on production, price, and resource thresholds.

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Tullow Oil continues to focus its operations on West Africa, with active assets in Ghana, Gabon, and Côte d’Ivoire, and has committed to achieving net zero Scope 1 and 2 emissions by 2030. The company is dual-listed on the London and Ghana stock exchanges under the ticker symbol TLW.

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Gulf Energy, the buyer, is a key supplier of refined petroleum across Kenya and inland East Africa and is also involved in power generation and industrial construction.

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