This is because the group’s Corporate Business Plan does not project sufficient free cash flow generation to allow it fully repay these notes when they fall due.

The group would ,therefore, need to access debt markets within the viability assessment period with the directors confident that the Group would be able to secure the funding required to maintain adequate liquidity headroom throughout the period.

This was disclosed in Tullow’s 2022 annual report and accounts which was released on March 24, 2023.

The report noted that management was focused on mitigating the risks around production, operating cost increases and potential outflows associated with disputes in order to reduce the likelihood of risks.

Furthermore, the directors have considered additional mitigating actions that may be available to the group such as incremental commodity hedging executed in periods of higher oil prices and alternative funding options.

It is also considering further rationalisation of the group’s cost base including cuts to discretionary capital expenditure, portfolio management and careful management of stakeholder relationships.

“Based on the results of the analysis and the ability to mitigate some of the risks associated with the downside scenarios, the board of directors has a reasonable expectation that the group will be able to continue in operation and meet its liabilities, including through refinancing activities as they fall due over the five-year period of their assessment,” the report noted.

Business Plan 

The report pointed out that a failure to grow the business via targeted investment in existing fields and/or investment in new fields could ultimately impact its ability to deliver the Business Plan and meet longer-term production targets.

As such, it said the group was focusing on the Jubilee Expansion project, Jubilee South East, North East and TEN Enhancement Projects.

It said its exploration strategy was focused on acreage close to existing infrastructure to enable discoveries to be converted to production quickly.

The group said it would also continue to invest in non-operated portfolio, including accelerating projects where possible; go into mergers & acquisitions; inorganic growth with a focus on producing assets and working to secure a long-term gas offtake commercialisation contract in Ghana as agreed in principle by the board.

“Tullow remains exposed to erosion of its balance sheet and revenues due to oil price volatility, unexpected operational incidents, cost inflation and failure to deliver targeted farm downs of exploration assets and Kenya.

“Failure to deliver our Business Plan could have a material negative impact on cash flow and our ability to reduce debt and strengthen the balance sheet, which may affect our ability to meet our financial obligations when they fall due,” the report noted.