This week the indebted oiler this week divested a major stake in its Ugandan development project for US$900mln, and has had to downgrade its production forecast for 2017.
Analysts reckon the company, which has nearly US$5bn of debt, is under pressure and is potentially at high risk should oil prices waiver again.
“Still heavily indebted, Tullow needs substantial cash generation to pay down its debt at a reasonable speed,” said Nicholas Hyett, Hargreaves Lansdown analyst.
“For that it needs its big Ghanaian fields, Jubilee and TEN, to be operating at full capacity.
“News that TEN will be producing 15,000 less barrels a day in 2017 than previously expected, even if that is due to issues outside the company’s control, is less than welcome.
“With the group’s hedges all but exhausted and net debt still more than 3.5x revenue, Tullow is very exposed to a downturn in the oil price.”
Selling up in Kenya could be one solution for Tullow, according to Malcolm Graham Wood, who highlighted chatter from the company’s conference call.
He said: “during the conference call the future of the Kenya investment was questioned, it looks as if the asset is on fast track to salesville.”
Africa Oil, Tullow’s partner in Kenya, has already demonstrated a possible blueprint as back in February it agreed a farm-out with Maersk which delivered some US$427mln to the Toronto listed oiler (as well as future development commitments).
That deal saw Africa oil halve its interest in blocks 10BB, 13T and 10BA in Kenya down to 25% – where discoveries in the Locichar basin amount to an estimated 750mln barrels of recoverable resources – and Tullow still retains its original 50% stake in the project.