- The company also signed an oil marketing and off-take contract with Glencore for Tullow's crude oil entitlements in Ghana and Gabon.
- Tullow's shares were 3.6 per cent higher at 31.5 per cent in early trade. They have fallen more than 17 per cent so far this year.
Tullow Oil has entered a $400 million five-year debt facility deal with Glencore GLEN.L which would help manage its senior notes maturing through 2026.
The interest on the facility will be Term Secured Overnight Financing Rate (SOFR) plus 10 per cent on drawn amounts.
Analysts at Peel Hunt believe the facility "significantly de-risks" Tullow's ability to refinance its 2026 notes.
"This uncertainty has been a key drag on the share price and we expect the shares to react well to today's announcement," the brokerage said.
Tullow's shares were 3.6 per cent higher at 31.5 per cent in early trade. They have fallen more than 17 per cent so far this year.
The company also signed an oil marketing and off-take contract with Glencore for Tullow's crude oil entitlements in Ghana and Gabon.
Tullow is also pleased to announce that it has entered into oil marketing and offtake contracts with Glencore for Tullow's crude oil entitlements from the Jubilee and TEN fields in Ghana and the Rabi Light entitlements in Gabon which run concurrently with the notes facility agreement.
'Glencore's $400 million facility commitment is a strong endorsement of our business plan and strategy. 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,'' Tullow CEO Rahul Dhir said.
The proceeds from this facility, together with cash on the balance sheet and $800 million of free cash flow expected to be generated from 2023 to 2025.
It will also allow the company to fully address all outstanding 2025 Notes and position it for a successful refinancing of the 2026 Notes.
Commenting on the transaction, Alex Sanna, CEO of the Oil & Gas Division of Glencore, said they are pleased to complete the landmark $400 million notes facility for Tullow.
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.
This breathes hope into the firm's operations in Africa, including Kenya's Turkana oil plan which has been on hold for almost five years now as the firm struggles to find a strategic investor.
The delays saw Tullow partners TotalEnergies and Africa Oil withdraw from the activities in South Lokichar, Turkana County, where commercial oil extraction is yet to begin.
Although three Indian state-run oil exploration companies started talks with Tullow Oil in May to buy a stake in the London-based firm's block in Kenya, more information on the planned deal is still scanty.
Oil India Chairman Ranjit Rath told journalists that Oil India, along with ONGC Videsh, the overseas investment arm of Oil and Natural Gas Corp is talking to Tullow, without elaborating on the size of a possible stake.
The facility will be available to draw for 18 months and proceeds will be used for liability management of Tullow's senior notes maturing in March 2025.