Tullow Oil plc has been informed by its two minority partners, TotalEnergies and Africa Oil Corp., of their intention to issue notices of withdrawal from Blocks 10BB, 13T and 10BA in the South Lokichar basin (the “project”) for differing internal strategic reasons. As a result, Tullow’s working interest in these blocks will increase from 50% to 100%.
The Board considers that owning 100% of the project creates more optionality, gives Tullow more flexibility in the ongoing process to secure strategic partners, creates a simpler Joint Venture Partnership and streamlines project delivery. This is a low-cost development project that has the potential to unlock material value for Kenya.
The prospective strategic partners have been informed. They remain engaged and detailed farm-out discussions continue with several companies. Whilst the process has taken longer than expected, Tullow remains focused on securing a strategic partnership this year.
Regarding their withdrawal, Africa Oil President and CEO Keith Hill commented, “We have taken the decision to exit our Kenya concessions as our strategy has shifted to focus on production and high potential exploration opportunities, including our Orange Basin portfolio where we are now appraising the exciting Venus discovery, offshore Namibia.”
Project progress continues and the updated Field Development Plan (FDP) was submitted to the Kenyan regulator, Energy and Petroleum Regulatory Authority (EPRA), in March 2023 and is now under review by EPRA. Tullow will continue to work collaboratively with Government of Kenya and EPRA to get the FDP approved.
Following the withdrawal of the minority partners, Tullow’s net Project 2C contingent resources are expected to increase from 231 MMboe to 461 MMboe, taking the group’s total contingent resources from 605 MMboe to 836 MMboe. Net capex guidance for 2023 in Kenya will increase from c.$10 million to c.$15 million, less than 5% of Group capex.
Tullow will continue to work with the Government of Kenya and its host communities to make the region a significant energy producing province.