Tullow Oil - comment

Tullow Oil is in the process of identifying the 2026 SSN holders, which some see as a precursor to a liability management exercise. Senior Secured Bondholders have recently re-grouped, advised by law firm Cleary Gottlieb, in an attempt to prevent Tullow from refinancing the 2025 senior Unsecured Notes ahead of the 2026 Senior Secured Notes.  

We take a different view - firstly, Tullow has recently won the first and largest part of the tax arbitration case brought by Ghana tax authorities against Tullow.  With this behind them, Tullow is in a better position to assess its options.  Secondly, the Senior Unsecured Notes are likely to be refinanced by the Glencore facility currently in place, and the options for the Senior Secured Bondholders to block this are de minimus. 

However, the Glencore facility is expensive at $+10%, and therefore Tullow will seek to refinance the whole structure imminently.  The 2025 Notes will take the view they don’t need to participate (maturing in March) and therefore the 2026 Notes will be left contemplating production issues and a refinancing versus a restructuring.