Tullow Oil is in talks with its bondholders about refinancing a nearly $1.3 billion (€1.1 billion) bond due next year, as the imminent maturity adds to pressure on the Irish-founded, Africa-focused oil explorer.
Discussions have focused on both the London-listed firm’s struggling performance and its refinancing options, according to people familiar with the situation who asked not to be named discussing a private matter.
Some of the company’s bondholders have begun working with the law firm Weil, Gotshal & Manges LLP ahead of more formal discussions and potential amendments to the debt, some of the people said.
Corporates would typically look to refinance bonds 12 to 18 months ahead of their redemption, but weakening performance and high leverage have added to the challenges for Tullow.
Weil, Gotshal & Manges declined to comment. Tullow declined to comment on bondholders working with Weil.
“We are making good progress with plans to refinance and simplify the group’s capital structure during 2025,” a spokesman for Tullow said.
Tullow became one of the UK’s hottest independent oil explorers after making major African discoveries in the late 2000s. But it took on huge debts to develop them, and in recent years struggled to bring Kenyan fields onstream. This year it agreed to sell the Kenyan deposits and offloaded assets in Gabon as it looks to pay down debt.
Such asset sales risk impacting production, with the firm warning that full-year output may slump, sending its shares to their lowest since 2020 earlier this month.
As of June 30, Tullow had $1.8 billion of drawn debt, of which about $1.3 billion was accounted for by its senior secured bond. The approaching maturity of that bond in May next year has weighed on sentiment, with refinancing risks highlighted by Moody’s Ratings and S&P Global Ratings in their recent downgrades of the firm.
With the maturity of Tullow’s bond now less than nine months away the cash price at which the debt is quoted is down to around 85 cents on the dollar, according to data compiled by Bloomberg.
Tullow has raised $300 million through the sale of its Gabonese assets. Tullow’s spokesperson also confirmed that the company expects to receive $80 million from the sale of its assets in Kenya to Gulf Energy Ltd by the end of the year. --Bloomberg
