Africa Oil’s partner Tullow plans to raise cash

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Tullow Oil mulls $750m rights issue to slash debt

LONDON: Britain’s Tullow Oil plans a rights issue to raise about 607 million pounds ($750 million) to slash its $4.8 billion debt burden and make investments in drilling and exploration in Latin America and Africa.

Tullow, whose founder and long-serving chief executive Aidan Heavey will hand over to Chief Operating Officer Paul McDade in April, was hit hard by the collapse in oil prices in 2014 just as it was investing heavily in an oil project off Ghana.

Under the terms of the 25 for 49 rights issue, Tullow said it would issue 466.9 million shares at 130 pence each.

“The rights issue comes as a surprise to us and possibly indicates banks were not as supportive to RBL refinancing as we were expecting,” Jefferies analyst Mark Wilson said.

Tullow, which had tightened its investment budget to $500 million this year, from $900 million in 2016, had net debt of about $4.8 billion as of Dec. 31.

The company said it would use the proceeds from the rights issue, which is being underwritten by Barclays, JPMorgan and other banks, for investments in new drilling opportunities and further exploration and appraisal programmes in offshore Ghana. The company said it also plans to invest in more exploration and appraisal activity in Kenya and fund drilling projects in Africa and South America.

Tullow also said that Cnooc Uganda had exercised its pre-emption rights to buy 50 per cent of the interests in Uganda which are being transferred to Total.

Reuters

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