Tullow - comment

As we have suggested since late last year, Tullow is buying back some of its 2025 Senior Notes (subordinated to the Senior Secured). Tullow has launched an Unmodified Dutch Auction with $75m of cash proceeds. We have been expecting an announcement from the Company stating they had bought bonds rather than announcing a tender. The size of the tender is smaller than wehad expected. but this may be restricted because of the Consolidated Leverage Ratio, which differs from the stated leverage ratio as it includes some capital leases, mainly related to the TEN FPSO. The covenant is an incurrence test and is expected to fluctuate over FY23 with working Capital movements and amortisation of the capital lease.

Separately, Tullow announced they are reviewing their investment in the Espoir field, in Côte d’Ivoire, where they hold a 23% working interest. The field is producing 10,000 gross boepd, but is currently having issues with the FPSO and requires remediation work throughout 2023. Production is not expected to cease until 2035. Note, Tullow owns two exploration licenses in Côte d’Ivoire, 90% interest in both, and has been under pressure from the government to invest. No further details have been released by the Company.