Tullow Oil Memo 221020
- Understand factors driving whether any potential restructuring for Tullow would precede the $ 21 Senior Unsecured Notes (SUNs) maturity or be pushed closer to the $ 22s SUNs maturity – Jan-21 RBL Liquidity Forecast Test; capacity for additional secured debt; refinancing; asset sales; shareholder time optionality; potential RBL covenant waivers; liquidity and EV sensitivity to Brent oil forward curve
- Understand how the new UK Restructuring Plan / “Super Scheme” would likely be applied as the primary process should Tullow restructure and what recoveries the restructured package would achieve for the $ 21s vs $ 22s and $ 25s, depending on the timing of any potential restructuring
- Understand how sensitive FY 2022 liquidity is to the realised Brent crude price
- Understand what shocks to the Brent forward curve and the reserve / production trajectory are needed to generate a high enough valuation for Tullow’s EV to fully cover all SUNs
- Restructuring and SUNs recovery analysis for Tullow under UK Super Scheme
- Estimation of Tullow’s capacity for additional secured debt (without such security being given to the SUNs), whether as ratio debt incurred via a Bank Credit Facility or under the Credit Facilities and General Liens baskets
- Detailed liquidity analysis and projections – RBL commitment amortisation and capacity re-determination; sensitivity to Brent prices; sensitivity to asset sales
- Financial projections, DCF valuation and sensitivities (to Brent forward curve and production)
- How would Tullow be restructured and with what resulting SUNs recoveries?
- What scenarios can unfold if the Jan-21 RBL Liquidity Forecast Test is breached?
- Would Tullow restructure before or after the $ 21s Jul-21 maturity?
- Would lenders be willing to provide additional secured debt financing?
- View, Variant Perception & Recommendations
- H1 20 Results, Financial Projections, Valuation & Sensitivities
- Restructuring Analysis