- Tullow Oil Plc completes sale of Kenya assets, which had 463 million barrels of 2C resources as of 31 December 2024, to local firm Gulf Energy Ltd.
- British firm has received $40 million, reflecting the entire proceeds of tranche A as set out in the Sale and Purchase Agreement (SPA).
- Tullow retains a no-cost back-in right for a 30% participation in potential future development phases.
After 14 years exploring oil and gas resources in Kenya, British firm Tullow Oil has sealed its exit from the East African country, leaving the job of advancing extraction to a local company Gulf Energy Ltd.
Gulf Energy Ltd will now take over all of Tullow’s working interests in Kenya, where oil find is advancing towards development in the South Lokichar Basin, in Turkana County. Since 2011 Tullow has been exploring and appraising its assets in Kenya as part of the longer-term oil development objective. The disposed assets have 463 million barrels of 2C resources as of 31 December 2024, the British firm noted in July.
In a market update posted by Tullow Oil at the London Stock Exchange, the company said its exit from Kenya follows successful completion of the sale of its entire working interest to Auron Energy E&P Ltd, an affiliate of Gulf Energy Ltd.
Potential future development
Tullow noted that it has received $40 million, reflecting the entire proceeds of tranche A as set out in the Sale and Purchase Agreement (SPA).
“The transaction represents the sale of 100 per cent of the shares in Tullow’s subsidiary Tullow Kenya BV, which holds Tullow’s entire working interests in Kenya, for a minimum cash consideration of $120 million, subject to customary adjustments,” said Tullow Kenya BV Managing Director Madhan Srinivasan while confirming the sale.
According to Madhan, while the payment will go a long way in strengthening Tullow’s balance sheet, the British oil explorer is expected to retain royalties, subject to certain conditions, and a no-cost back-in right for a 30 per cent participation in potential future development phases of the energy investments in northern Kenya.
In July, Tullow noted that its SPA with Auron Energy E&P notes that the sale will be split into a $40 million payment due on completion, $40 million payable at the earlier of Field Development Plan (FDP) approval or 30 June 2026, and $40 million payable over five years from the third quarter of 2028 onwards.
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Tullow Oil entitled to royalty payments
Additionally, SPA notes that Tullow will be entitled to royalty payments, subject to certain conditions. Tullow also retains a no-cost back-in right for a 30 per cent participation in potential future development phases. 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.
“After 14 years in Kenya, Tullow leaves behind strong assets, and we are delighted to pass the baton to Gulf Energy, a capable Kenyan company in the lead up to first oil, making Kenya an oil-producing country. We are very grateful for the support and co-operation extended to TKBV by various stakeholders in the Government of Kenya,” Madhan explained.
Take project forward
On his part, Gulf Energy Ltd CEO Paul Limoh said: “We are delighted to complete this transaction and to bring these assets under the stewardship of Gulf Energy Ltd. This project will play an important role in advancing Kenya’s domestic energy sector, creating opportunities for growth and development in the Turkana region, as well as supporting the country’s long-term energy security. We thank Tullow for its years of investment and commitment, and we look forward to building on that foundation as we work with partners and stakeholders to take the project forward.”
Ian Perks, Chief Executive Officer of Tullow, commented: “The successful completion of this transaction marks a significant milestone for the company and the achievement of another one of our key 2025 strategic priorities. The use of proceeds helps to strengthen our balance sheet further, and I would like to thank the team for their hard work and commitment, which have helped position the company strongly as we look to refinance our capital structure this year. On behalf of everyone at Tullow, I extend our best wishes to the people and Government of Kenya and wish Gulf Energy every success as they advance this project.”
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