Tullow Oil has entered into a US$400mn five-year notes facility agreement with Glencore Energy UK Limited (Glencore)
The facility will be available to draw for 18 months and proceeds will be used for liability management of Tullow's senior notes maturing in March 2025. The interest on the facility will be Term Secured Overnight Financing Rate (SOFR) plus 10% on drawn amounts.
The Company has also announced that it has entered into oil marketing and offtake contracts with Glencore for Tullow's crude oil entitlements from the Jubilee and TEN fields in Ghana and the Rabi Light entitlements in Gabon which run concurrently with the notes facility agreement.
Rahul Dhir, CEO, Tullow, commented, "Glencore's US$400mn facility commitment is a strong endorsement of our business plan and strategy. Today's announcement demonstrates our ability to access long term capital from a variety of sources and this facility is a material step in our refinancing strategy, following the successful and equity accretive tender offer in June. The proceeds from this facility, together with cash on balance sheet and US$800mn of free cash flow expected to be generated during 2023 to 2025, will allow us to fully address all outstanding 2025 Notes and positions us for a successful refinancing of the 2026 Notes."
Commenting on the transaction, Alex Sanna, CEO of the Oil & Gas Division of Glencore, said, "We are pleased to complete this landmark US$400mn notes facility for Tullow, along with the term oil marketing and offtake contracts from Tullow's production in Ghana and Gabon. This facility is a strong endorsement of Tullow's business plan and strategy, and demonstrates Glencore's capability in structuring finance solutions across the oil and gas sector."