Tullow Oil Plc is negotiating with its bondholders over the refinancing of a near $1.3 billion bond that expires next year, as the coming maturity adds to the pressure on the London-listed Africa-focused oil explorer.
The discussions have touched on both the company's poor performance and its refinancing chance, the people said, requesting not to be named talking about a private issue.
Some of the company's bondholders have begun talking with law firm Weil, Gotshal & Manges LLP ahead of more substantive discussions and potential restructuring of the debt, some of the individuals said.
It is traditional for companies to seek to refinance bonds 12 to 18 months in advance of the date when they are scheduled to be redeemed, but weak trading and high gearing have made it more challenging for Tullow.
Weil, Gotshal & Manges declined to comment. Tullow declined to comment on Weil representing bondholders.
"We are making good progress with plans to refinance and simplify the group's capital structure in 2025," Tullow's representative said in an e-mailed statement to Bloomberg News.
Tullow became Britain's hottest independent oil explorer following its massive African discoveries in the late 2000s. But it loaded itself up with giant debt to bring them on production and, in recent years, has struggled to get Kenyan fields into production. It agreed this year to sell the Kenyan deposits and dispose of assets in Gabon as it works to pay down debt.
Such asset sales risk impacting production, with the firm warning that full-year output may slump, sending its shares to their lowest since 2020 earlier this month.
As of June 30, Tullow had $1.8 billion of debt outstanding, of which some $1.3 billion was in the form of its senior secured bond. The fact that this bond is due to mature in May next year has weighed heavily on mood, with Moody's Ratings and S&P Global Ratings highlighting refinancing risks in their recent downgrade of the company.
As with the age of Tullow's bond now being less than nine months, the price in cash at which the debt is being quoted has fallen to as low as 85 cents on the dollar, Bloomberg data indicate.
Tullow received $300 million from selling its Gabonese assets. Tullow's representative also verified that the company anticipates receiving $80 million from selling its assets in Kenya to Gulf Energy Ltd at the end of the year.