Tullow Oil has reached an agreement to sell its entire Kenyan oil and gas business to Nairobi-based Gulf Energy Ltd for a minimum of $120 million.
The deal, announced on April 15, 2025, is part of Tullow’s strategy to reduce debt and strengthen its financial position. It marks a complete exit from Kenya by the company, with all past and future responsibilities for the assets being transferred to Gulf Energy.
The transaction involves the sale of Tullow Kenya BV, a wholly-owned subsidiary of Tullow Oil. Completion of the deal is expected later in 2025, pending regulatory approvals, final documentation, and payment guarantees.
The payment is structured in four parts. Tullow will receive $40 million when the deal is finalized. A second payment of $40 million will be made by June 30, 2026, or earlier if Kenya’s Field Development Plan (FDP) is approved. The third part of the payment involves $40 million to be paid over a five-year period starting in 2028, but only if Brent crude oil prices stay above $65 per barrel.
If any part of that amount is still unpaid by June 2033, the remainder will be paid in full regardless of oil prices. The final part of the agreement entitles Tullow to quarterly royalty payments of $0.50 per barrel, calculated on 80% of total production, provided certain oil price and production conditions are met.
Although Tullow is exiting Kenya, it has kept the option to return in the future. The company will be able to rejoin the project with up to a 30% stake in any future development phases, at no cost and before the government takes its share.
According to Tullow, this sale will help reduce its debt burden and avoid future capital commitments in Kenya. Combined with the $300 million it recently earned from selling assets in Gabon, the company believes the transaction puts it in a strong position to refinance and focus on its core operations. The first payment is expected before the end of 2025.
“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, Tullow’s Chief Financial Officer and Interim Chief Executive Officer.
“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,” he added.
