Tullow Oil's lenders have approved the size of its reserves-based lending facility at $1.9 billion, giving the group $700 million of undrawn loans and cash at the start of the second quarter, it said on Friday.
The company also said it was cutting its 2020 capital expenditure to $300 million, down $50 million from previous guidance, mainly through delaying activity. It said its cash flow breakeven point was an oil price of $35 a barrel.
Tullow, which had a market capitalization of about $204 million before markets opened on Friday, is due to pay back a $300 million convertible bond in July 2021.
"Securing the RBL facility provides the company with much-needed breathing room, though the equation remains the same," JPMorgan Cazenove analysts said.
"The company needs to monetize assets to be able to service debt when it becomes due, as the production base is unlikely to generate sufficient organic cash flow, particularly given the prevailing oil price outlook."
It 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. Tullow said it expects its hedging to result in a $30 million 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.
(Reporting by Shadia Nasralla Editing by David Goodman)
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