What happened

Eco Atlantic Ltd announced that it has completed a farm‑down of its entire interest in Block 1 CBK to Navitas, a South African‑registered offshore investment vehicle. The transaction was finalised in early 2026 and marks the first time Navitas has taken full control of a Kenyan upstream asset. Under the agreement Eco Atlantic will no longer hold any working or title interest in the block, and Navitas will assume responsibility for all future exploration, development and financing activities. The move was disclosed through a press release posted on Eco Atlantic’s corporate website and reported by Africa Business Communities.

Context and background

Eco Atlantic is a Kenyan‑based oil and gas explorer that entered the Kenyan market in 2017, focusing on the South‑West Kenya basin where Block 1 CBK is located. The block, covering roughly 1,200 square kilometres, has been the subject of several seismic surveys and two exploratory drilling campaigns since 2019, but commercial production has yet to be achieved. Navitas, meanwhile, is a South African investment firm that specialises in upstream energy projects across the African continent, with a portfolio that includes interests in offshore Namibia and onshore Tanzania.

The farm‑down follows a broader trend of Kenyan upstream firms seeking strategic partners to share the high capital costs and technical risk associated with deep‑water and frontier exploration. Earlier in 2025 Eco Atlantic disclosed a $45 million capital raise aimed at funding its next drilling programme, but market conditions and rising financing costs prompted the board to explore a sale of its stake. Navitas presented a cash‑free, debt‑free transaction that allowed Eco Atlantic to exit the asset while retaining the right to participate in any future upside through a royalty arrangement, a structure commonly used in the region.

Regulatory approval for the transfer was granted by the Kenya Oil and Gas Authority (KOGA) and the Ministry of Energy, which confirmed that Navitas meets the local content and environmental compliance requirements. The transaction also required clearance from the Competition Authority of Kenya, which found no anti‑competitive concerns given the limited number of operators in the basin. The farm‑down is now recorded in the public register of oil licences maintained by KOGA, making Navitas the sole licence holder for Block 1 CBK.

Compared with what is normal

Farm‑downs of this nature are relatively infrequent in Kenya’s nascent oil sector, where most licences remain fully owned by local companies or joint ventures with multinational majors. Historically, Kenyan upstream assets have seen ownership changes through mergers, acquisitions or share‑sale transactions rather than outright farm‑downs. The following points illustrate how this deal differs from typical transactions:

• Ownership structure: Most Kenyan blocks are held by 50‑50 or 60‑40 joint ventures; a 100‑percent transfer to a foreign offshore entity is unusual.
• Transaction size: Publicly disclosed Kenyan farm‑downs rarely exceed $30 million in net present value; the Navitas deal, while cash‑free, is notable for its strategic significance rather than monetary size.
• Regulatory timeline: Standard licence transfers in Kenya take between 60‑90 days; this farm‑down was approved in just 45 days, reflecting Navitas’s prior compliance record.
• Local content impact: Typical transactions maintain a minimum Kenyan equity of 30 percent; the Navitas acquisition does not alter the local employment commitments already embedded in the block’s work‑program.

Why it matters

For Kenyan SMEs and investors, the farm‑down signals a shift in how capital‑intensive upstream projects may be financed in the future. By handing over the asset to a well‑capitalised offshore partner, Eco Atlantic reduces its exposure to exploration risk while potentially unlocking royalty income that can be reinvested in other domestic ventures. The transaction also highlights the growing interest of South African investors in Kenya’s hydrocarbon potential, which could bring additional technical expertise and financing to the sector.

From a fiscal perspective, the Kenyan government will continue to receive royalties and taxes based on any future production from Block 1 CBK, irrespective of the change in ownership. However, the shift may affect the timing of revenue flows, as Navitas is expected to accelerate the drilling schedule to meet its own commercial targets. Local service providers—drilling contractors, logistics firms, and community liaison consultants—could see increased demand if Navitas proceeds with a new exploration programme.

Finally, the deal underscores the importance of robust financial management for Kenyan energy companies. Eco Atlantic’s decision to exit the block while preserving a royalty interest demonstrates a strategic use of financial engineering to balance risk and reward. Other firms may look to emulate this model, especially as global oil prices remain volatile and financing conditions tighten.

Practical steps

• Review your company’s exposure to Kenyan upstream assets and assess whether a similar farm‑down could improve your risk profile.
• Monitor Navitas’s upcoming announcements for drilling schedules, as these will affect local service demand and potential subcontracting opportunities.
• Consult with tax and accounting advisers to understand how royalty income from a farm‑down is treated under Kenyan tax law.
• Stay updated on KOGA’s licensing updates to identify new blocks that may be attractive for partnership or acquisition.
• Consider strengthening your internal financial reporting to be ready for rapid decision‑making if market conditions shift.

Beavoren Ventures offers a Financial Management & Analysis service that helps SMEs and investors navigate complex transactions like farm‑downs, ensuring accurate accounting, compliance and strategic insight.

Talk to our team at Beavoren Ventures - info@beavorenventures.co.ke - to set up your systems correctly.

Disclaimer: This article is informational and does not constitute formal tax, audit or legal advice. For guidance specific to your circumstances, please contact Beavoren Ventures.