Tullow Oil Plc has reached a deal for the sale of its entire interest in Tullow Oil Kenya BV for Ksh 15.5 billion ($120m) to Gulf Energy.
The two firms have signed a heads of terms agreement which will split the payment into three tranches until 2028.
Tullow says the consideration will be split into a $40m payment due on completion, $40m payable at the earlier of Field Development Plan (FDP) approval or 30 June 2026, and $40m payable over five years from the third quarter of 2028 onwards
“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, Chief Financial Officer and Interim Chief Executive Officer of Tullow.
Under the deal, Tullow expects to receive the first payment later this year upon finalization of the purchase and sale agreement in coming months and will retain a back-in right for a 30pc participation (before Government back-in) in potential future development phases at no cost.
“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,” added Miller.