12 Jul Tullow selling bonds to fund oil exploration
Oil major Tullow (LSE:TLW) is selling US$300 million worth of convertible bonds to raise money for the development of new oil fields in East and West Africa.
Ian Springett, Tullow’s chief financial officer said: “The proposed convertible bond issue will further diversify sources of funding and give the company access to a new investor base.”
The bonds will be issued by Tullow Oil (Jersey) Ltd., a wholly owned subsidiary incorporated in Jersey. Barclays Bank Plc and BNP Paribas are acting as joint bookrunners. The private placement is only open to institutional investors.
The bonds are expected to carry a coupon of between 5.875% and 6.625% a year payable semi-annually in arrears on 12 January and 12 July each year.
Tullow announced in April that banks had agreed on an amendment of a reserve-based lending of $3.5 billion and an extension of its corporate facility to April 2018. The facility commitments remain at $1 billion until April 2017.
Tullow and its partners have discovered 750 million barrels of oil and north-western Kenya and 6.5 barrels in western Uganda. The firm will move to the production stage once they receive approval from the Ugandan government.
Tullow, Africa Oil Corporation and Maersk Oil jointly plan to drill four wells in the South Lokichar basin in Kenya.
The three companies are currently negotiating a joint development deal with the Kenyan government to install the Kenya crude oil pipeline.
Aidan Heavy, Tullow CEO explained: “In East Africa, the governments’ agreement that there will be separate pipelines to develop resources in Uganda and Kenya brings greater clarity to both projects.”
The plan will make use of the existing wells in Lokichar and crude storage taken to generate 2,000 barrels of oil per day in July 2017 subject to Tullow signing an agreement with the Turkana county government and the national government.