Tullow Oil Hit By Ratings Downgrade On Ghana Risk

Moody's Investors Service raises concerns over maritime dispute in Ghana as it lowers Tullow debt ratings.

Tullow exploration field

Anglo-Irish petroleum explorer Tullow Oil has been hit by a downgrade to its debt default rating just weeks after the company reported its first loss in 15 years.

Moody's Investors Service has downgraded the corporate family rating and probability of default rating for Tullow to B1 from Ba3. The ratings on its $650m 2020 and $650m 2022 senior notes were downgraded to B3 from B2 following the downgrade of Ghana's sovereign rating by Moody's on March 19.

Despite the downgrades, Moody's said: "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."

Tullow said in February that it would scrap its final dividend payout, which will result in shareholders receiving a full–year payout of just 4p per share, compared with the 12p it delivered over each of the last three years. The company also revealed a $2bn full–year pre–tax loss mainly down to pretax impairments amounting to $2.87bn.


Shares in Tullow slumped earlier this month amid concern that its Tweneboa-Enyenra-Ntomme (TEN) development off the coast of Ghana could fall behind schedule. The project is located in disputed waters where Ivory Coast has asked the International Tribunal for the Law of the Sea (ITLOS) to order Ghana to halt all drilling work.

TEN is a key project for Tullow and a delay would exert extra pressure on the company’s already strained finances, which have been hit by the 50pc slump in the price of crude over the last year.

"Until TEN comes on stream, Tullow's leverage will remain high," warned Moody's. "We are looking in particular towards the timely development of the TEN project to help Tullow to recover its credit metrics and gain financial flexibility to manage any fiscal pressures in Ghana. In this context, we are following the ongoing arbitration procedure between Ghana and Cote d'Ivoire over the maritime border, that relates to the area where the TEN project is located."


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