Tullow Oil plc (Tullow) has announced that its wholly-owned subsidiary, Tullow Overseas Holdings BV, has signed a heads of terms agreement with Gulf Energy Ltd (the “Buyer”) to sell Tullow Kenya BV, which holds Tullow’s entire working interests in Kenya, for a total consideration of at least $120 million.
In a statement, Tullow said 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 June 30, 2026, and $40 million payable over five years from the third quarter of 2028 onwards.
Additionally, Tullow will be entitled to royalty payments subject to certain conditions. Tullow will also retain a back-in right for a 30% participation in potential future development phases at no cost.
The transaction is accretive to both equity and leverage and further accelerates Tullow’s deleveraging process.
This transaction will constitute a significant transaction for the purposes of UKLR 7 of the UK Listing Rules (effective as of July 29, 2024). Richard Miller, Chief Financial Officer and Interim Chief Executive Officer of Tullow, commented: “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, while 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.
“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.”
Source:https://energynewsafrica.com
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