British oil and gas company Tullow Oil has agreed to increase the value of its Kenya exit deal by an additional $9 million (Ksh1.16 billion) as it moves to strengthen its balance sheet and simplify its global portfolio.

Tullow announced that its wholly owned subsidiary, Tullow Overseas Holdings BV (TOHBV), reached an agreement with Auron Energy E&P Limited, an affiliate of Gulf Energy Limited, to increase the consideration for the shares in Tullow Kenya BV that were sold in 2025.

The company also agreed to end its rights to future Kenyan royalty payments and a back-in option linked to the assets acquired by Gulf Energy.

Completion of the latest transaction and receipt of the additional funds are expected by July 17, 2026.

Tullow Oil Chief Executive Officer Ian Perks said the agreement would help the company access cash sooner while reducing complexity in its portfolio.

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

He added that the deal showed continued progress in implementing Tullow’s strategy of disciplined capital allocation.

Details of Kenya exit deal

Tullow Oil completed the sale of 100 per cent of Tullow Kenya BV to Auron Energy E&P Limited, an affiliate of Gulf Energy, after signing a Sale and Purchase Agreement (SPA) in July 2025.

The transaction involved the transfer of Tullow’s interests in Kenya’s oil exploration blocks, including Blocks 10BB and 13T in Turkana County.

Tullow discovered oil in Turkana in 2012, creating expectations that Kenya could become an oil-producing country. However, the project faced several challenges, including high development costs, crude oil characteristics, infrastructure limitations and delays in reaching commercial production.

The sale marked Tullow Oil’s exit from Kenya after more than a decade of exploration and development activities.

Under the original agreement, Tullow was expected to receive payments in three tranches.

The first payment of $40 million was made when the transaction was completed on September 25, 2025.

A second $40 million payment was received on March 9, 2026, after meeting the conditions agreed under the deal.

The third payment of $40 million remains payable and is not affected by the latest agreement. It is scheduled to be paid no later than June 30, 2033.

The final payment will be made through quarterly instalments of $2 million starting in the third quarter of 2028, provided the average Dated Brent oil price reaches at least $65 per barrel in the preceding quarter.

If the full $40 million has not been paid by June 30, 2033, the remaining amount will become payable as a single payment regardless of oil prices at the time.

End of royalty and back-in rights

As part of the latest agreement, Tullow will surrender its future royalty payments and back-in rights linked to the Kenyan assets.

The previous deal allowed Tullow to receive quarterly royalty payments of $0.5 per barrel multiplied by 80 per cent of total production, subject to production levels, oil prices and resource conditions.

The company also retained an option to take a 30 per cent participating interest in possible future development phases.

Those rights will now end under the revised agreement.

However, Tullow confirmed that the $40 million Tranche C payment remains unchanged and will continue to be payable by Gulf Energy.

The proceeds from the transaction will go towards strengthening Tullow’s financial position.

Tullow’s Kenya exit and tax dispute

The latest agreement comes after Tullow completed its withdrawal from Kenya amid efforts to reduce debt and focus on its core producing assets.

The company previously classified its Kenyan operations as non-core and shifted attention towards Ghana, where it has continued investing in oil production.

The Kenya exit also attracted attention after the Kenya Revenue Authority (KRA) issued a tax assessment of about $170 million (approximately Ksh22 billion) against Tullow over the disposal of its Kenyan subsidiary.

The tax demand relates to alleged underpaid VAT and capital gains tax covering the period between 2020 and 2025.

Tullow rejected the claim, describing the assessment as “wholly without merit”, and said it would challenge the demand through the established objection and appeals process.

The company has not made financial provisions for the claim because it does not expect any cash outflow from the dispute.

Tullow’s exit transferred control of Kenya’s oil assets to Gulf Energy, a Kenyan company that is expected to lead the next phase of development.