Tullow - comment

All the chatter re Tullow is: Will they, or won’t they merge with Capricorn? Tullow management continue to keep their head down and focus on what they can control. H1 results show continued improvement in the Company’s operational KPIs and while they have hedged away some of the upside from current oil prices, the business continues to deleverage. Given current oil prices, even adjusting for their hedge position, the Company’s net leverage will be 1.5x at year-end (3yrs ahead of plan). We exited our position in June at 86%, but at current levels (79% on the 25’s, and 94% on the senior Secured’s) the yields of c. 18% and 12% respectively are worthy of another look.