Tullow Oil strikes $300m deal to exit Gabon as it focuses on debt reduction

Tullow Oil plc has entered into a binding agreement to sell its entire Gabonese portfolio to Gabon Oil Company for $300 million net of tax. The move aligns with the company’s broader strategy to streamline its asset base, accelerate debt reduction, and strengthen its financial position.

This deal involves the corporate sale of Tullow Oil Gabon SA, marking the company’s complete exit from Gabon’s oil sector. The transaction includes approximately 10,000 barrels per day (kbopd) of expected 2025 production and around 36 million barrels of 2P reserves, independently audited at the end of 2024. Tullow Oil plans to finalise the sale and purchase agreement (SPA) by the second quarter of 2025, with completion expected by mid-year.

The agreement is subject to regulatory clearances, including approval from Gabonese government ministries and the CEMAC Competition Commission. Tullow Oil must also comply with Gabonese requirements related to its 2024 dividend distribution before the deal can be closed. By divesting its Gabonese assets, Tullow Oil is advancing a key objective—reducing its net debt, which is projected to fall to $1.15 billion once the transaction is finalised. This move follows a series of financial decisions aimed at stabilising the company’s balance sheet while maintaining its focus on high-value operations in Ghana and Côte d’Ivoire.

Why Is Tullow Oil Selling Its Gabon Assets?

Tullow Oil has been restructuring its portfolio to focus on assets with the highest potential for long-term value creation. In recent years, the company has faced challenges related to its debt levels and fluctuating oil production. The decision to sell its Gabonese oil operations is part of a strategic shift to concentrate on core West African assets, particularly the Jubilee field in Ghana, where Tullow Oil has been ramping up production efforts.

Gabon has historically been a significant part of Tullow Oil’s portfolio, but the company has gradually moved toward a more streamlined business model, prioritising assets with higher margins and lower operational risks. The proceeds from this transaction will be used to support debt repayment and ensure financial flexibility as the company pursues its refinancing plans for 2025.

How Does This Sale Impact Tullow Oil’s Financial Position?

Tullow Oil has been working to improve its financial stability, and the Gabon Oil Company acquisition plays a key role in its deleveraging strategy. The company has faced mounting financial obligations in recent years, but the $300 million asset sale represents a significant step toward reducing debt and improving liquidity.

Beyond this deal, Tullow Oil recently secured a major financial win in January 2025 when it was exempted from a $320 million tax obligation in Ghana. The ruling by the International Chamber of Commerce provided much-needed relief and further strengthened Tullow Oil’s financial standing. In addition, Tullow Oil has been optimising its operational efficiency. The company’s upcoming drilling activities at the Jubilee field in Ghana, combined with its first-quarter production optimisation efforts, are expected to further enhance cash flow and production stability.

What Is the Market Reaction to Tullow Oil’s Strategy?

Tullow Oil’s restructuring efforts and financial improvements have sparked a mixed reaction in the stock market. Listed on the London Stock Exchange under the ticker TLW, the company reported a $55 million profit after tax for 2024, reversing a $110 million loss from the previous year. This turnaround, driven by reduced impairments and asset revaluations, led to a 3.9% increase in share price following the earnings announcement.

Despite this positive movement, Tullow Oil’s stock price remains well below its 52-week high of 40.32 GBp, trading at 15.07 GBp as of March 25, 2025. The stock has rebounded 17.15% from its 52-week low of 12.86 GBp, reflecting cautious optimism among investors. Analyst sentiment is divided. MarketBeat gives the company a “Hold” rating with a 12-month price target of 25 GBp, suggesting a 68.93% potential upside. MarketScreener maintains a more optimistic outlook, rating Tullow Oil as “Outperform” with a target price of 43.46 GBp.

What Are the Challenges Ahead for Tullow Oil?

While the Gabon Oil Company acquisition provides financial relief, Tullow Oil still faces challenges. The company must navigate production declines and oil market volatility, both of which have influenced investor sentiment. The success of its Jubilee field expansion and operational efficiencies in Ghana and Côte d’Ivoire will be critical in maintaining stable revenues.

Another factor to consider is regulatory approvals. The Gabon asset sale remains contingent on government and competition commission clearances, which could introduce delays. Additionally, the company must finalise its 2024 dividend processing in compliance with Gabonese regulations, which adds another layer of complexity. Despite these challenges, Tullow Oil is positioning itself for long-term sustainability. Its focus on debt reduction, strategic asset management, and operational improvements suggests that the company is taking measured steps toward financial resilience.

Is Tullow Oil a Buy, Sell, or Hold?

For investors evaluating Tullow Oil, the decision to buy, sell, or hold depends on individual risk tolerance and investment goals. Some investors may see the company’s debt reduction strategy, improved profitability, and planned production increases in Ghana and Côte d’Ivoire as indicators of long-term potential, making it a strong candidate for investment. Others may prefer to hold the stock, waiting for further clarity on operational performance before committing additional capital.

Short-term investors, however, may consider selling due to market volatility and regulatory uncertainties surrounding the Gabon Oil Company acquisition. Analysts project a positive outlook, with the potential for a price recovery in the next 12 months. However, execution risks remain, and investors should monitor developments closely.

Tullow Oil’s $300 million Gabon asset sale marks a transformative moment for the company. By shedding non-core assets, accelerating debt reduction, and focusing on high-margin production fields, Tullow Oil is restructuring its portfolio for long-term stability. The success of its refinancing efforts and drilling plans in Ghana will be key to determining how the company performs in the evolving energy landscape.

As Tullow Oil moves forward, investors and industry observers will be watching closely to see whether this strategic shift pays off, positioning the company for sustained growth in the years ahead.