Tullow - comment

With options exhausted, the proposed A&E represents the Company’s only viable path. 66% of bondholders, alongside Glencore, have agreed to a two-year extension to November 2028, providing Tullow additional time to execute a potential sale. The terms include a clause that, unless a legally binding sale and purchase agreement is executed by September 2027, the maturities of the extended notes and the new $100m super senior facility will be accelerated to May 2028.

The bonds remain in the low 80s; the A&E removes the default risk at the original May 2026 maturity, but arguably should trade lower given the Company’s deteriorating performance and delayed gas payments from the Ghanaian government.

Compounding the risk, Tullow disclosed a new potential tax liability, with Kenya asserting a $170m claim. While asset coverage has historically been sufficient to support debt levels, current conditions, including oil prices languishing at $60–70/bbl, unresolved and emerging tax claims, and Jubilee gross production declining to 60k boepd from 100k, have materially reduced recovery expectations.

Tullow issued four announcements this morning, which we will review in more detail in a full update later today.