Tullow Oil PLC said Monday it had signed an agreement to divest its Kenyan portfolio to Gulf Energy Ltd. for at least $120 million in cash.
The assets to be sold hold about 463 million barrels of 2C resources, London-based Tullow said in a statement online.
The transaction involves the sale of the shares of Tullow Kenya BV by Tullow Overseas Holdings BV to Gulf Energy’s Auron Energy E&P Ltd. The sale and purchase agreement announced Monday builds on a heads of terms agreement announced April.
“Tullow retains a back-in right for a 30 percent participation in potential future development phases at no historic cost”, Tullow said. “This right can be exercised if a third-party investor participates in future development phases, whether through a sale or farm-down of the purchaser’s interest in the assets”.
The parties expect to complete the transaction this year, subject to approval by the Eastern African country’s Competition Authority, approval of a development plan and the fulfillment of payments.
“The consideration will be split into a $40 million payment due on completion, $40 million payable at the earlier of field development plan approval or 30 June 2026, and $40 million payable over five years from the third quarter of 2028 onwards”, Tullow said.
“In addition, Tullow will be entitled to royalty payments subject to certain conditions”.
Tullow added, “All past and future decommissioning liabilities and all material past and future environmental liabilities will be transferred to the purchaser”.
Tullow chief executive Richard Miller said, “For a total consideration of at least $120 million, the Transaction supports our strategic priority to strengthen the balance sheet, with the first two payments totaling $80 million expected before the end of the year”.
“We continue to advance plans to optimize our capital structure during 2025”, Miller added. “Coupled with the sale of our Gabonese assets, the disposal of these non-core assets is expected to provide cash proceeds of $380 million in 2025”.
In May, Tullow said it had penned a deal to sell 100 percent of the shares of Tullow Oil Gabon SA to state-owned Gabon Oil Co. for $300 million in cash, net of tax. Tullow Oil Gabon holds Tullow’s entire portfolio in the Central African nation, which consists of non-operating stakes.
The assets to be sold had around 36 million barrels of proven and probable reserves as of yearend 2024, according to Tullow. It expects the assets to produce approximately 10,000 barrels of oil per day this year.
The sale is expected to be completed this year.
To contact the author, email jov.onsat@rigzone.com
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