Tullow Oil’s new rights issue expected to increase boost on Kenyan exploration and subsequently enable the UK-based firm offset it debt burden which stands at around $4.6 billion (Sh474 billion).
Clearing of the firm’s massive debts will allow Tullow further explore its African oil blocks and elsewhere according to its new Chief Executive.
According to Paul McDade, who is due to become the company’s Chief Executive next month (April), the Oil firm is expected to raise $607 million (Sh62.5 billion).
McDade further noted that Tullow has a strong set of low cost production development and exploration assets in Africa. Through rights issue the firm will be able to focus on business growth, breakeven after three years of making loss.
To achieve its goal, the firm also aims at improving its production and sell assets (as it did recently in Uganda) to further reduce its debt.
Tullow is set to commence exploration and appraisal work in its Jubilee and TEN fields near Ghana and its fields on the Kenyan coast.
According to Deutsche Bank,Tullow Oil plc’s (LON:TLW) US$790million rights issue may have come as a surprise to investors, but, the recapitalisation is attractively priced.
Last week, Tullow announced that its existing shareholders will receive rights to buy 25 new shares for every 39 shares they own, at a purchase price of 130p per share – a huge 45% discount to Thursday’s closing price.