S&P alters Tullow view to stable

S&P said it revised the outlook for Tullow Oil plc to stable from negative and affirmed its CCC+ ratings.

Tullow obtained government approval for the $575 million divestment of assets in Uganda to Total.

“Tullow expects to receive an initial portion of $500 million in the coming days, thereby improving its liquidity and allowing it to reduce its net debt,” S&P said in a press release.

S&P said Tullow’s liquidity will remain under pressure until the debt maturities in 2021 and 2022 have been addressed. The sharp reduction in production volumes and low oil prices in 2020 hurt Tullow’s liquidity position and led to a capital structure the agency said it considers unsustainable.

Tullow’s immediate challenges include tight covenant headroom and debt maturities of $300 million in July 2021 and $650 million in April 2022, S&P said.

Tullow plans a $1 billion divestment program. Tullow’s asset sale in Uganda is the first step of the program, and the company is working on further asset sales, S&P noted.

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