Tullow Oil PLC (LON:TLW) moved closer to a debt reset as it announced it is launching a US$1.8mln bond offer and has been given commitments for a US$600mln ‘super senior’ revolving credit facility.
The aim is to extend out maturities in its borrowing, using proceeds of the bond issue to repay reserves based lending and debt coming due later this year and in 2022.
Presently, Tullow has US$300mln of bonds with a 6.625% coupon due in July 2021, and, US$650mln of senior notes with a 6.25% coupon due in 2022.
The new bonds will mature in 2026 whilst the revolving credit facility would expire in 2024.
Tullow also has US$800mln of senior notes with 7% coupon due in 2025. These will not be repaid as part of the refinancing.
In March’s financial results for 2020, Tullow reported a US$1.22bn loss for the 2020 financial year, as it made US$1.23bn of non-cash write offs and impairments against its exploration assets.
The company, which previously built its reputation in exploration, last year exited operations in Jamaica and the Comoros Islands and significantly reduced its footprint in Côte d'Ivoire and Peru.
Tullow’s debt pile stood at US$2.4bn at the end of 2020. At that time, it noted that it had been reviewing its business plan and operating strategy with its creditors and their advisers, as debt refinancing is pursed.
Tullow produced 74,900 barrels of oil per day in 2020, which was in line with expectations, and generated some US$1.39bn of revenue. Gross profit was marked at US$403mln. The company highlighted some US$598mln of underlying operating cashflow.
Noting higher crude prices the company highlighted that each US$10 increment in the crude oil price delivers Tullow around US$100mln of additional cash flow.
Looking to 2021, the company said production in the present financial year is in line with expectations, and repeated guidance of 60,000 to 66,000 bopd.