Martin Mbogo, Tullow Kenya’s country manager. Tullow has ongoing exploration projects in Kenya’s Lokichar area. PHOTO | FILE
British oil and gas exploration firm Tullow Oil has been downgraded, less than a month after it reported its first loss in more than a decade.
Moody’s Investors Service downgraded both the corporate and probability of default ratings for Tullow to B1 from Ba3.
The ratings on its senior note of $650 million (Sh58.5 billion) due in 2020 and another of a similar amount due in 2022 were lowered to B3 from B2 following the downgrade of Ghana’s sovereign rating by Moody’s on March 19.
Ghana has a ballooning public debt amid falling export revenues which has pushed its currency down by 31 per cent in the year to February 2014.
Tullow Oil has ongoing exploration projects in Kenya’s Lokichar area where multiple discoveries of oil have been registered since 2012. It also has projects in Uganda and Ghana.
In February, it reported a $2 billion (Sh180 billion) pretax loss, its first in 15 years, sacrificing its dividend to deal with a sharp decline in oil prices.
Despite the downgrade, Moody’s said Tullow’s future remained bright due to the massive discoveries across Africa.
“Tullow’s fundamental business position remains solid, supported by its sizeable oil and gas resource base, which has been enhanced in recent years through successful exploration and appraisal programme leading to the opening of new hydrocarbon basins and significant oil discoveries, including in Ghana, Uganda and Kenya, that underpin the company’s long-term production growth trajectory,” Moody’s said.
Tullow said on March 20 it had raised an additional $450 million (Sh40.5 billion) of capital from existing lenders, boosting its financial strength despite weak oil prices. It said its total committed debt facilities were now around $6.3 billion (Sh567 billion.
Its lenders have agreed to extend existing commitments by $200 million (Sh18 billion), increasing available debt to $3.7 billion (Sh333 billion). It also secured an additional $250 million (Sh22.5 billion) through a corporate debt facility that has now risen to $1 billion (Sh91 billion).
Today’s announcement demonstrates the resilience of our debt capital structure and quality of our portfolio to generate significant liquidity, even at low oil prices,” said Ian Springett, Tullow’s chief financial officer, in a statement last Friday.
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