* \u2018We\u2019re done\u2019 with assets sales for now, says CEO<\/p>\n
* Bond received $4.2 bln in investor interest<\/p>\n
* New bond to simplify $2.4 bln debt structure<\/p>\n
LONDON, May 7 (Reuters) – Tullow Oil\u2019s $1.8 billion bond, which was launched to help it manage a $2.4 billion debt pile, drew more interest from investors than expected after the Africa-focused producer\u2019s financial overhaul, the chief executive said on Friday.<\/p>\n
Rahul Dhir also told Reuters the firm did not plan to sell more oil and gas fields after disposing of assets worth $750 million following last year\u2019s oil price plunge, including its $575 million sale of a Uganda project stake to Total.<\/p>\n
\u201cNo divestments are on the anvil, we think we\u2019re done with that,\u201d said Dhir, who took up his post at the London-listed company in July when oil prices had been hammered by the pandemic.<\/p>\n
The new bond, priced at a coupon of 10.25%, is expected to complete on May 17, the firm announced on Thursday.<\/p>\n
Signalling investor confidence in the company, the bond received interest totalling $4.2 billion, Dhir said.<\/p>\n
The bond will allow Tullow to pay down its reserve-based lending facility with banks and its two bonds totalling $950 million which were set to be paid in July 2021 and in 2022.<\/p>\n
But the new bond\u2019s 10.25% coupon is higher than the 6.625% and 6.25% on its 2021 and 2022 bonds, which Berenberg analysts said would add about $30 million to Tullow\u2019s annual interest costs although they said would still help the company.<\/p>\n
\u201cThis provides much needed breathing space to improve operating performance and get the balance sheet in better shape,\u201d Berenberg said in a note.<\/p>\n
Tullow raised the prospect of a cash crunch in September following the oil price collapse. Since then, it has reached an agreement with banks to scale down its reserve-based loan, taking its liquidity to around $900 million.<\/p>\n
Tullow would have two bonds maturing in 2025 and 2026, simplifying its debt structure, said Dhir.<\/p>\n
Net debt will remain at $2.4 billion, with Tullow\u2019s market capitalisation standing at 802 million pounds ($1.12 billion).<\/p>\n
\u201cThe company has a tremendous amount of headroom to execute its business plan,\u201d Dhir said.<\/p>\n
Tullow reported an after-tax loss of $1.2 billion in 2020 after writing off exploration assets and other impairments. It expects to produce 60,000-66,000 barrels per day (bpd) in 2021, down from 74,900 bpd last year after asset sales.<\/p>\n