Tullow Oil PLC (LSE:TLW) shares rose in Monday’s early dealing as the Africa-focused oil producer secured a new US$400 million debt facility through a deal with Glencore.
It will be a five-year arrangement, with drawdowns available over an initial 18-month period, and will carry interest at an overnight benchmark rate plus 10%. At the same time, Tullow agrees to oil marketing and offtake contracts with Glencore.
The facility is intended to allow Tullow to “fully address” a number of financing agreements scheduled to mature in 2025 and 2026.
Tullow chief executive Rahul Dhir described the agreement as “a strong endorsement of our business plan and strategy”.
Dhir said: “Today's announcement demonstrates our ability to access long term capital from a variety of sources and this facility is a material step in our refinancing strategy, following the successful and equity accretive tender offer in June.”
Alex Sanna, chief executive of Glencore’s oil and gas business, added: “This facility is a strong endorsement of Tullow's business plan and strategy, and demonstrates Glencore's capability in structuring finance solutions across the oil and gas sector."
In London, Tullow shares advanced 6.8% to change hands at 32.47p each, giving the company a market capitalisation of £471 million.