Tullow - comment
Moody’s have downgraded Tullow Oil’s bond ratings, mainly on the back of the downgrade of Ghana’s long term issuer rating from Caa2 to Ca. This was expected due to 70%+ of Tullow’s production and reserves based in Ghana and in the inability to split the country risk from the operations. Tullow have not yet been impacted by the Ghanaian economic difficulties, but it is possible that the government may seek higher taxes etc from the oil & gas sector, which would impact Tullow’s cashflow and deleveraging prospects.
It should be noted that Tullow has no local borrowings, sells its oil for US$ outside the country and is incorporated in the UK. Tullow has no liquidity issues and Moody’s project positive FCF in FY22-23, plus retaining access to its undrawn $500m RCF facility.