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Investing.com -- S&P Global Ratings has downgraded U.K.-registered Tullow Oil to ’CCC-’ from a higher rating, citing concerns about potential debt restructuring risks. The outlook remains negative.
The rating agency highlighted that Tullow Oil has not yet been able to refinance or extend the maturity of its $1.3 billion senior secured notes due on May 15, 2026. If the company fails to address this issue within the next six months, it could face a liquidity crisis.
S&P also noted that given Tullow Oil’s current weak liquidity position, there is a high possibility the company may pursue a debt restructuring, which could be considered a distressed transaction.
The rating agency expects Tullow Oil to generate negative free operating cash flow after lease payments in both 2025 and 2026. These projections are based on S&P’s Brent crude price assumptions of $60 per barrel for the remainder of 2025 and 2026, and $65 per barrel thereafter.
According to S&P, the negative outlook indicates that ratings could be lowered further if Tullow Oil is unable to fully repay or extend the maturity of its senior secured notes due in May 2026, or if it pursues a transaction considered tantamount to a default, including a subpar exchange.
Conversely, S&P stated it could take positive rating action if Tullow Oil extends the maturity of its senior secured notes in a transaction not viewed as distressed, or if it secures alternative financing providing a comfortable liquidity cushion for the next 12 months.
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