Tullow - comment

We have clarified with the Company that there are no restrictions currently on the Company buying back the 2026 bonds, given its current leverage stats. Additionally, the Consolidated Leverage Ratio (CLR) is different from the leverage ratio stated in their annual release, as the CLR includes some capital leases, mainly those related to the TEN FPSO, which was c.$500m at December 2022. This leaves the CLR ratio at 1.5x. Note this covenant is an incurrence test and will fluctuate over FY23 due to Working Capital movements and the amortisation of the capital leases.

Ultimately, the Company has upcoming maturities in the 2025 Subordinated bonds and the 2026 Senior Bonds. Subject to the CLR ratio <1.5x, there are no restrictions on buybacks of the 2025 bonds either. We fully expect some buybacks in H1 2023 but with CAPEX front-loaded in FY23 and production back-ended the scope for meaningful size is limited. We are updating our model and hope to share later this week.