Tullow Oil's lenders have approved the size of its reserves-based lending facility at $1.9 billion, giving the group $700m of undrawn loans and cash at the start of the second quarter, it said today.
The company also said it was cutting its 2020 capital expenditure to $300m, down $50mn from its previous guidance, mainly through delaying activity.
It said its cashflow breakeven point was an oil price of $35 a barrel.
Tullow, which had a market capitalisation of about $204 million before markets opened today, is due to pay back a $300m convertible bond in July 2021.
Analysts said that securing the RBL facility provides the company with much-needed breathing room, though the equation remains the same.
They said that Tullow needs to monetise assets to be able to service debt when it becomes due, as the production base is unlikely to generate sufficient organic cashflow, particularly given the prevailing oil price outlook.
Tullow has hedged about 60% of its crude oil sales this year with a floor price of $57 a barrel and 40% of its sales next year with a floor price of $53.
It said it expects its hedging to result in a $30m receipt for March.
Benchmark oil prices slumped by about 65% in the first quarter as oil demand was shredded by the coronavirus pandemic and measures by governments to slow its spread.
