Tullow Oil’s lenders have cleared the size of its reserve-based lending facility at $1.9 billion, giving the organization $700 million of undrawn loans and cash at the beginning of the second quarter, it stated Friday.
The corporation further stated it was paring its 2020 capital expenditure to $300 million, down $50 million from previous steerage, mainly by delaying activity. It stated its cashflow breakeven point was an oil price of $35/barrel.
Tullow, which had a market capitalization of around $204 million earlier than markets opened Friday, is because of payback a $300 million convertible bond in July 2021.
“Securing the RBL facility provides the corporation with much-required breathing room, although the equation remains the same,” JPMorgan Cazenove analysts stated. “The corporate must monetize assets to be able to service debt when it becomes due, as the manufacturing base is unlikely to generate ample organic cashflow, significantly given the prevailing oil price vision.”
It hedged around 60% of its crude oil sales this year with a floor price of $57 a barrel and 40% of its sales subsequent year with a ground price of $53. Tullow stated it expects its hedging to lead to a $30 million receipt for March.
Benchmark oil costs plunged by around 65% in Q1 as oil demand was shredded by the coronavirus pandemic and measures by governments to contain its spread.