Tullow oil warned it risked defaulting on a debt facility if it does not fix a potential liquidity shortfall, as the africa-focused explorer slumped to a $1.4bn pre-tax loss the first 1 / 2 of the season.
The london-listed organization said on wednesday that a potential exchangeability shortfall threatened its ability to satisfy demands at a redetermination next january of the reserves-based lending center.
The company stated it absolutely was checking out different refinancing options nevertheless the news, unveiled in its half-year results, forced its stocks down a fifth during the early trading in london.
During the january redetermination of their rbl, tullow must show sufficient funds for the after 18 months, a period of time that includes the dropping because of of $650m of debt in april 2022.
The organization warned that when it absolutely was incapable of show it had adequate resources the 1 . 5 years to july 2022 or resolve the forecast exchangeability shortfall within 90 days of failing the january test, you will see a conference of standard beneath the rbl center because of the end of april 2021.
It stated actions into consideration to address the possibility shortfall included refinancing the senior records because of in april 2022 or convertible bonds because of in july next year.
Other options under review consist of wanting to secure new liquidity from banking institutions or money areas investors.
Tullow delivered the warning as the half-year results revealed it had dropped to the red the 6 months to summer 30, in contrast to a $268m pre-tax revenue through the exact same period just last year.
Its net debt stack also increased to $3bn from $2.9bn on exact same point this past year, while free cashflow had been negative, which the organization blamed on factors such redundancy expenses, taxation and essential capital spending.
Incomes were 16 % lower year-on-year at $731m as production fell in addition to team realised reduced oil charges for its production.
Although biggest hit into the results came from a $941m writedown of the possessions in uganda because be sold to frances total plus kenya; plus $418m of impairments showing lower long-term oil cost assumptions.
A number of smaller independent explorers have actually reported losses the first half of the year after brent crude costs slumped from virtually $70 a barrel in january to below $20 in april because the coronavirus pandemic ravaged worldwide power need.
But tullow was already battling a unique dilemmas before the pandemic. its stocks plummeted 70 % last december with regards to told investors it anticipated production to be virtually a 3rd lower than it had forecast at the outset of 2019.
Chief executive rahul dhir, whom joined the team in the summer from competing africa-focused coal and oil group delonex energy, features ordered a thorough post on the companys profile, development customers and capital structure, that he expects to set down at a money areas day towards the end with this year.
Mr dhir informed the financial instances on wednesday there clearly was no silver bullet to resolving tullows problems but he stressed the company has also been making progress in slashing its expense base and insisted the board had conviction there was prospective available once its capital structure had been addressed.
Before mr dhirs arrival, tullow had currently lay out an agenda to increase more than $1bn through disposals and also by axing 35 % of their staff.