Tullow Oil agrees $1.7bn reserves-based loan agreement with banks

Over the past few weeks, Tullow has been reviewing its business plan and operating strategy with lending banks within its reserves-based lending facility (RBL) and their financial advisers, as well as with the financial advisers of the 2021 convertible bond holders and the 2022 bond holders.

The plan is expected to generate "material" cash flow, Tullow said, which will allow it to reduce current debt levels and create "the foundation to address near-term debt maturities".

The new facility, which remains subject to formal approval by a majority of lending banks, will be effective from 26 February, and will leave Tullow with liquidity headroom of free cash and available debt facilities of about $0.9bn.

"The debt capacity reduction from circa $1.8bn based on the September 2020 redetermination reflects the effects of six months of production and the removal of the Equatorial Guinea and Dussafu assets as a result of their sale to Panoro Energy," Tullow said.