The oiler’s gearing peaked at around 5x earnings at the peak of the market cycle, and following recent refinancing efforts -a rights issue and a new reserves based lending facility – has so far brought it down to around 3.3x.
Tullow’s stated deleveraging target sees the ratio reducing to 2.5x and, so long as crude remains at the current US$60 per barrel lev el, that marker could be reached during the next calendar year.
“At these higher oil prices, we’ll be able to deleverage very quickly,” McCoss said in an interview with Proactive Investors at the Oil Council conference in London.
That being said, McCoss noted that the group’s actual deleveraging schedule is based on US$50 oil, not US$60.
McCoss also talked through some of the “counter cyclical opportunities” for growth, which are described as ‘low commitment’.
“These are low work commitments, they are under sensible terms. It gives us exciting upside for the future, at low costs today,” he said.
Specifically, McCoss spoke about the Tullow’s prospects offshore Namibia and, in South American waters, the Guyana-Suriname basin.