Sale and Purchase Agreement for the strategic sale of Kenyan assets to Gulf Energy Ltd:

Following an announcement on 15 April 2025, Tullow Oil plc (“Tullow”) on July 21^st, 2025 was pleased to announce that Tullow Overseas Holdings BV (the “Seller“), a wholly owned subsidiary of Tullow, has signed a sale and purchase agreement (SPA) with Tullow (as guarantor for the Seller), Auron Energy E&P Limited (the “Purchaser“), an affiliate of Kenya’s Gulf Energy Ltd.

Confirming the milestone, Tullow Kenya BV (TKBV) Managing Director, Madhan Srinivasan, outlined that the signing of the SPA marks a pivotal milestone in the ongoing transaction and brings the sale closer to completion.

In the transaction, Gulf Energy Ltd shall act as guarantor for the Purchaser (the “Purchaser Guarantor“) for the sale and purchase of 100 per cent of the shares in Tullow Kenya BV (“Tullow Kenya”), which holds Tullow’s entire working interests in Kenya (the “Disposed Assets“) for a minimum cash consideration of K sh 15,510 million (M) (US$120 M) (the “Transaction“), subject to customary adjustments.

The consideration will be split into a K sh 5,170 M (US$40 M) payment due on completion, K sh 5170 M (US$40 M) payable at the earlier of Field Development Plan (FDP) approval or 30 June 2026, and K sh 5170 M (US$40 M) payable over five years from the third quarter of 2028 onwards. Additionally, 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.

“We are pleased to announce the signing of the Kenyan SPA, marking another step closer to completion of the Transaction with Gulf Energy. For a total consideration of at least US$120 million, the Transaction supports our strategic priority to strengthen the balance sheet, with the first two payments totalling US$80 million expected before the end of the year.

“Furthermore, we are pleased to retain a potentially material zero-cost value option to participate in future development phases.

“We continue to advance plans to optimize our capital structure during 2025. Coupled with the sale of our Gabonese assets, the disposal of these non-core assets is expected to provide cash proceeds of US$380 million in 2025,” explained Richard Miller, Chief Financial Officer (CFO) and Interim Chief Executive Officer (CEO), Tullow.

 

The transaction highlights:

• Corporate sale of Tullow’s entire Kenyan portfolio of assets, representing c.463 million barrels of 2C resources.
• Minimum cash consideration of US$120 million, with additional royalty payments subject to certain conditions.
• Tullow retains a back-in right for a 30 per cent participation in potential future development phases at no historic cost. 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.
• All past and future decommissioning liabilities and all material past and future environmental liabilities will be transferred to the Purchaser as part of the Transaction, details of which are noted in paragraph 2 of Part C of Appendix III.
• The conditions precedent to be met in advance of completion of the Transaction include (i) approval of the Transaction by the Competition Authority of Kenya, and (ii) the Seller and the Purchaser agreeing and implementing a plan to achieve a physical and functional separation of Tullow Kenya from the Tullow group.
• Completion of the Transaction, satisfaction of conditions precedent and receipt of funds from Tranche A and FDP approval (and consequent receipt of funds from Tranche B) are expected in 2025.

Consideration structure:

• Minimum consideration of US$120 million, consisting of:

o Tranche A: US$40 million payable on Transaction completion.

o Tranche B: US$40 million payable at the earlier of FDP approval or 30 June 2026.

o Tranche C: US$40 million payable no later than 30 June 2033, subject to the following payment schedule:

• Payments of US$2 million per quarter starting in the third quarter of 2028, provided Dated Brent oil price averaged at least US$65/bbl during the preceding quarter.
• If US$40 million in aggregate has not been paid by 30 June 2033, the remainder will be due as a bullet payment at that point, irrespective of the prevailing oil price.
• Royalty Payment: In addition to the above, the Seller will receive quarterly royalty payments of US$0.5/bbl multiplied by 80 per cent of total production, subject to oil price, resource and production-related conditions to the extent that the Purchaser retains its interest in the Disposed Assets.

Rationale for and expected benefits of the Transaction:

• Value accretive transaction that significantly reduces leverage, further strengthening Tullow’s balance sheet following the disposal of interests in Gabon for US$300 million, where the SPA was signed on 13 May 2025 (LINK).
• The Transaction is in line with Tullow’s strategy of focusing on high-margin, self-funded production with strong cash flows.
• Positions the Group well to finalise the optimisation of its capital structure in 2025 and accelerate deleveraging.
• Revised portfolio of assets will enable Tullow to leverage its technical skills and focus on more material positions in key fields to grow its reserve base.
• Provides strong foundations for organic growth within the core portfolio and inorganic growth opportunities, with a focus on deepwater operated positions in West Africa.
• Retains a no-cost re-entry option for Tullow’s shareholders to participate in future upside of the Disposed Assets.

Use of proceeds:

Net proceeds from the Transaction will be used to strengthen Tullow’s balance sheet by materially reducing Tullow’s net debt and the Transaction is therefore expected to reduce the risk associated with a holistic debt refinancing expected in 2025.

Information on the Disposed Assets:

• The Disposed Assets comprise all of Tullow’s working interests in Kenya, where significant discovered oil resources are progressing towards development in the South Lokichar Basin in Kenya. Since 2011 Tullow has undertaken exploration and appraisal of the assets as part of the longer-term development objective.
• The total asset value subject to the Transaction is c.US$112.2 million as at 31 December 2024.
• There was no gross profit attributable to the Disposed Assets for the year ended 31 December 2024.
• The Disposed Assets have no production and no 2P reserves as of 31 December 2024. The Disposed Assets have 463 million barrels of 2C resources as of 31 December 2024.
• Further information about the Disposed Assets is set out in Appendix I to this announcement, and historical financial information relating to the Disposed Assets is set out in Appendix II to this announcement.(Ends).