Tullow Oil outlook upgraded by S&P

Tullow Oil's outlook was revised to 'stable' from 'negative' thanks to the $724m equity injection alongside the farm down of its assets in Uganda for $900m and other connected measures.

"We now project stronger credit metrics in 2017, with improved liquidity underpinned by increased cash on the balance sheet and more headroom under its financial covenants," said S&P, affirming its 'B' corporate credit rating.

The stable outlook reflected the credit agency's expectation of improved credit metrics in the coming 12-18 months, with its right issue being accompanied by and the ramp-up of the TEN oilfield project offshore Ghana and the return of the nearby Jubilee oilfield to full production.

S&P expected a funds from operations-to-debt ratio of 15%-20% in 2017 and 2018, against its view that an adjusted FFO to debt ratio of "about 12% as commensurate with the rating".

The fund injection, plus divestment of some Dutch assets will cut net debt to just under $4bn from the $4.8bn at the end of 2016 and "should accelerate" the company's objective to reduce net debt to EBITDA to less than 2.5x, the agency felt.