Tullow Oil will continue to drive to reset its balance sheet after a tough three year downturn by selling $650m (£470m) of bonds to cover its 2020 debt repayments.
The seven-year bonds effectively to push the company’s near-term debt back to 2025 in its latest step to steady the debt-hit oil producer as oil prices begin to rise.
The Africa-focused oil and gas producer revealed last month that it returned to profit for the first time in three years in 2017 due to rising oil prices.
The recovery helped slash its debt pile by $1.3bn last year to $3.5bn after its borrowing burden forced a $750m rights issue and a major financial restructuring.
Although the company won over the market with its better-than-expected cash flows for last year equity analysts have warned that Tullow’s debt “continues to loom large”.
Hargreaves Lansdown warned that until the debt is back at manageable levels Tullow’s future will remain largely outside of its control and at the mercy of volatile oil prices.
The FTSE 250 company is poised for a change of fortunes after a difficult first half last year in which it was stung by the failure of a promising South American project, and was forced to take a $650m writedown on its TEN oil field in Ghana which then led to a deeper than expected $400m loss.
Tullow’s boss Paul McDade, has said by the end of the year the company will restart high impact exploration drilling to build its pipeline of projects.
East Africa is a key frontier for the group, with Kenya particularly important, given it is where a significant prospect could start producing as early as 2021.