Tullow Oil plc has agreed to sell its entire working interests in four blocks in the South Lokichar Basin, Kenya for a “minimum” of $120 million cash.
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The heads of terms agreement follows the company’s attempts in 2023 to secure a farm-out after its then partners exited the project.
Buyer Gulf Energy Ltd will pay Tullow in tranches of $40m with additional royalties, subject to conditions.
Tullow also retains a back-in right for a 30% participation in potential future development phases at no cost.
A full sale and purchase agreement is expected to compete this year with first payment of $40m.
Chief financial officer and interim chief executive, Richard Miller, said that the sale accelerated the company’s “deleveraging journey”.
“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.”