Tullow Oil Secures Additional $9 Million as It Revises Kenya Exit Agreement

British oil producer Tullow Oil will receive an additional $9 million (about Ksh1.16 billion) after agreeing to revise the terms of its completed exit from Kenya, trading future royalty and participation rights for an immediate cash payment as it continues efforts to reduce debt and streamline its global operations.

The London-listed company said its wholly owned subsidiary, Tullow Overseas Holdings BV, reached an agreement with Auron Energy E&P Limited, an affiliate of Gulf Energy, to amend the transaction under which Tullow sold Tullow Kenya BV in 2025.

Rather than changing the original purchase price for the company, the revised agreement compensates Tullow for relinquishing rights it retained after the sale, including future royalty payments and an option to participate in any future development of the Kenyan oil assets.

The transaction is expected to close, with the additional funds received, by July 17, 2026.

“This transaction is another important step in our strategy to deliver value from our portfolio and strengthen the balance sheet,” Chief Executive Ian Perks said.

“By accelerating the receipt of $9 million from the sale of the shares in Tullow Kenya BV, we are securing near-term cash proceeds and simplifying our portfolio.”

The immediate payment allows Tullow to convert uncertain future earnings into cash today, providing greater financial flexibility while eliminating exposure to long-term royalty arrangements tied to Kenya’s yet-to-be-developed oil production.

Immediate Cash Instead of Future Oil Royalties

Under the revised agreement, Tullow will forgo royalty payments it could have earned if commercial oil production eventually begins in Kenya.

The original sale agreement entitled the company to quarterly royalty payments calculated at $0.50 per barrel multiplied by 80% of production, subject to production levels, oil prices and other conditions.

Tullow also held a contractual option to acquire a 30% participating interest in future development phases of the project.

Those rights have now been surrendered in exchange for the additional $9 million payment.

However, the amendment does not affect the final deferred payment under the original sale agreement. Gulf Energy remains obligated to pay $40 million under the third and final tranche.

That payment is due no later than June 30, 2033, with quarterly instalments of $2 million scheduled to begin in the third quarter of 2028, provided the average Brent crude price reaches at least $65 per barrel during the preceding quarter. Any unpaid balance by the 2033 deadline becomes immediately payable regardless of oil prices.

Kenya Exit Completed in 2025

Tullow formally exited Kenya after selling 100% of Tullow Kenya BV to Auron Energy E&P Limited under a Sale and Purchase Agreement signed in July 2025.

The transaction transferred Tullow’s interests in the Blocks 10BB and 13T oil fields in Turkana County, ending the company’s more than decade-long presence in Kenya’s upstream petroleum sector.

Tullow’s 2012 oil discovery in Turkana raised hopes that Kenya could join the ranks of oil-producing nations. Yet the project struggled to advance to commercial production because of high development costs, infrastructure constraints, financing challenges and the characteristics of the crude.

Under the original agreement, Tullow was to receive $120 million in three instalments.

The company received the first $40 million when the transaction closed on September 25, 2025, followed by a second $40 million payment on March 9, 2026, after contractual conditions were met.

The newly agreed $9 million payment is separate from those instalments and reflects compensation for rights surrendered after the sale rather than an increase in the original purchase price.

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