Tullow proposes bonds for African programs

Tullow Oil said Wednesday it was proposing a bond offering to help raise new capital for investments in its pioneer basins off the coast of Africa.

Due in 2021, the bonds could bring in $300 million the company said it would use to fund operations in West and East Africa. Chief Financial Officer Ian Springett said in a statement the proposed bond would diversify the funding stream for the company.

"Our focus will continue to be on strengthening the balance sheet and deleveraging the business," he said.

Tullow entered the year with an announcement to cut its spending plans from $1.7 billion to $1.1 billion in 2016 and was looking to scale back even further. In April, the company said it was reducing its capital spending forecast from $1.1 billion to $1 billion.

Net debt for Tullow rose to $4 billion for the year, compared with $3.1 billion for the previous year. Losses narrowed, however, from year-end $197 billion in 2014 to $1.09 billion last year.

A report from Moody's Investors Service said the outlook on "all Tullow's ratings is negative," though said the company may recover on the back of the planned mid-2016 start up of its Tweneboa Enyenra Ntomme, or TEN field, off the coast of Ghana. At its peak, the TEN field should be able to produce up to 80,000 barrels of oil per day.

Tullow started development of the TEN field three years ago and expects production to peak at about 80,000 barrels of oil per day. First oil is expected in three to six weeks.

Production for the year should average about 23,000 bpd. The company cautioned, however, that drilling in the TEN field may stand still because of border disputes between the governments of Ghana and Ivory Coast. A tribunal is reviewing the maritime boundaries, with a decision expected in late 2017.