Tullow signs $2bn debt deal

LISTED EXPLORATION group Tullow Oil, which has major projects in Ghana and Uganda, has completed a $2 billion refinancing deal.

In a separate statement, the company said it had made a significant discovery at an offshore Ghanaian oil well.

Tullow has finalised the expansion of its debt facility from $1.2 billion to $2 billion with a syndicate of 15 banks.

The ability to put in place debt arrangements of this scale in the current credit environment reflects the quality of Tullow’s assets as well as the strength of its banking relationships, chief financial officer Ian Springett commented.

This deal follows a successful share placing in January which saw the company raise £400 million from shareholders and new investors.

These fundraising efforts will enable Tullow to develop its various exploration programmes, including its Jubilee project off the coast of Ghana.

“Tullow now has ample funds at its disposal to bring Jubilee ... through the development phase and into production,” commented Goodbody analyst Gerry Hennigan.

Tullow expects that the Jubilee field will start producing oil by the second half of 2010.

The company also announced yesterday that it has made a significant discovery at the Tweneboa exploration well, located 25km west of the Jubilee field.

According to the group’s exploration director Angus McCoss, this discovery means that Tullow has a 100 per cent success rate in the region.

“This result has the potential to deliver yet another transformational growth step for Tullow,” he said.

“Both outcomes are very important for Tullow. Tweneboa keeps alive the market’s belief in Tullow’s upside potential,” Davy stockbrokers said in a note yesterday.

“And the debt refinancing should provide the balance sheet certainty the market requires,” Davy added.

Tullow’s share bounced almost 8 per cent, or 58 pence, to £7.93 on the London Stock Exchange as investors reacted favourably to the double announcement.

Tullow will report its full year results tomorrow.