Tullow Oil Prospect in Doubt if Oil Slump Upsets Asset Sale

A multinational oil and gas exploration company, Tullow Oil, delivered a warning on Thursday that oil tumble may threaten planned $1 billion asset purchase seen as refilling its treasury as the Africa-oriented group’s lenders may limit loans confirmation, thus jeopardizing its future.

Photo: Reuters

The company said it estimates its free cash flow to slip to $50 million-75 million in 2020 with a condition of oil price at $50 per barrel, but hopes to increase cash from the asset purchase.

Recall, Brent oil benchmark was trading by 6.85 percent lower, at $33,32 per barrel at 1320 GMT on Thursday, erasing the early peak of $70 per barrel at its January highs.

Tullow Oil added, that the oil rates slide might threaten the asset purchase which may curb its lenders from approving semi-annual reserve-based mortgages or amendments to its debt covenants if needed.

Meantime, company’s debt facility to be proved in March at $1.9 billion, of which it may still tap $700 million.

Recall, Tullow Oil announced its plans to cut a third of its employees after the company had been affected by weak output in Ghana, disruptions in East Africa and weaker-than-expected-for oil quality in Guyana.

Oil has tumbled in last weeks due to the expected effects of the Covid-19 virus on global growth, and the fail of an agreement to lower oil output by major producers.

Tullow Oil shares collapsed by 27.90 percent at 1432 GMT.

Source: Reuters