Tullow Oil plc (LON:TLW) now has a solid platform to refinance its debts in 2017 says chief financial officer Ian Springett following agreements to extend its borrowing by a further US$345mln.
The Africa-focused oiler has also passed a six-monthly review for its reserves based lending facility.
The debt capacity generated by Tullow’s asset base continues to be in excess of its commitments, the company said in a stock market statement.
Tullow’s credit under the RBL now stands at some US$3.3bn, it added.
It also noted that following its new start-up, the TEN operation offshore Ghana, the company’s capital requirements have now reduced substantially.
As TEN ramps up to capacity the group expects to be generating free cash flow from its producing assets, and then it can start paying down debt.
Tullow's debt, at the beginning of October, amounted to US$4.7bn and it had US$900mln of cash and unutilised debt.
Springett told investors: “This successful redetermination and the new RBL accordion commitments underline the support for Tullow from our relationship banks and the quality of our assets and their ability to generate significant liquidity.
“Over the past three months, Tullow has started production from TEN and confirmed insurance cover for the Jubilee FPSO turret repair and business interruption.
“With capital expenditure now substantially reduced, we are generating free cash flow and starting to deleverage our balance sheet. This provides us with a solid platform to refinance our RBL and Corporate Facility during 2017, enhance our capital structure and enable future growth."