Case Summaries · Oil & gas

Tullow Oil paid up to execute a complicated A&E, but volatile oil and complicated taxes remain life's two certainties

An out-of-court amend and extend pushed $1.19bn of May 2026 notes to November 2028 at a 15% all-in coupon, with no principal haircut for holders who signed on time. Weeks later, an ICC tribunal upheld a $196m Ghanaian tax assessment with 100% penalties attached. How Ghana's $393m in tax claims get paid decides whether the extra time is enough.

By EURx · 19 October 2026

Key terms

Company: Tullow Oil plc (LSE: TLW), the oil producer whose producing business is now two fields offshore Ghana, Jubilee (38.98% working interest) and TEN (54.84%), operated by Tullow Ghana Ltd. Glencore markets Tullow's crude entitlement and buys the cargoes
Process: out of court. A binding Lock-Up Agreement with holders of c.66% of the notes and with Glencore was signed 20 February 2026. The consent solicitation launched 25 March 2026 and the transaction completed 27 April 2026. A court process was never needed: an English restructuring plan was the backstop had the consent solicitation failed, but holders of over 90% had signed within six days of the lock-up announcement
The instrument: $1.285bn 10.25% senior secured notes due May 2026, issued under an indenture dated 17 May 2021. On 23 April 2026 $100m was redeemed at par, pro rata, plus accrued interest and a 1% cash fee. The remaining ~$1.2bn was released, and holders received new senior secured notes due 15 November 2028 one-for-one
Fees: holders who acceded to the lock-up by 27 February 2026 received $1,000 of new notes per $1,000, a 1.00% cash early-bird fee, and a 5.00% fee paid in new notes allocated among the early birds pro rata. Holders who did not accede by 27 February received $950 of new notes per $1,000
New money: $25m of additional notes subscribed by Glencore, and a $100m undrawn super senior cargo prepayment facility from Glencore. Glencore's existing $400m secured notes facility was released into c.$423m of Glencore junior secured notes due 15 May 2030
Coupons: the 2028 notes pay 10.25% cash, 3.00% PIK and 1.75% pay-if-you-can per annum, quarterly, so 15% all-in where the PIYC coupon is paid in cash. PIK, and unpaid PIYC, capitalises on each payment date. Call protection of 101 applies for the life of the notes. The Glencore notes pay SOFR plus 12.75% PIK, with a further 0.75% PIK if Dated Brent averages above $65 over the period
Sweeps: cash above a $100m minimum liquidity threshold is swept to noteholders at 101, twice a year. $48m was swept on 24 June 2026
Springing maturity: unless a legally binding sale and purchase agreement that maximises value from the assets is signed by 30 September 2027, the maturities of the 2028 notes and the cargo prepayment facility are brought forward to 15 May 2028
Governance: four new independent non-executive directors and a board sub-committee overseeing value maximisation from the asset base. If certain governance conditions are not met, an event of default is triggered
Covenants: none on the 2028 notes, the Glencore notes or the cargo prepayment facility
Today: net debt $1.4bn at 30 June 2026, 1.9x EBITDAX, with liquidity headroom above $250m. Ratings: CCC+ from S&P and Fitch, Caa3 from Moody's. Ghana holds a $393m arbitration award against the operating company. The equity is worth about £175m, c.$230m; the shares closed at 11.56p on 15 October 2026, the last close on the feed
Where it trades: 2028 notes around 95c. The old-way 2026 notes traded near 80c before the lock-up was agreed

How we got here: an explorer that spent a decade selling fields to service what it borrowed

Tullow made its name finding oil where others had stopped looking. Jubilee, discovered offshore Ghana in 2007 with partners including Kosmos Energy, was producing by November 2010 and carried Tullow into the FTSE 100. TEN, the second Ghanaian field, produced first oil in 2016. The discovery-era Tullow also held Uganda and Kenya, and investors kept paying for the next find before it was made.

The oil crash of 2014 hit a company that had borrowed to build TEN. Net debt reached $4.8bn by early 2017 and Tullow raised $750m in a rights issue at a 45% discount. In December 2019 the chief executive and exploration director resigned, 2020 production guidance was cut and the dividend was suspended; the shares fell about 70% that day. Then 2020 / Covid shock brought another painful oil crash. Rahul Dhir arrived as chief executive in July 2020 and sold the Uganda stake to Total for $575m.

The repair job was a 2021 refinancing and four years of disposals. In May 2021 Tullow issued $1.80bn of 10.25% senior secured notes due May 2026 and agreed new oil hedges (costing ~$685m over 2021-2024). The proceeds repaid the reserves-based lending facility, redeemed the senior notes due 2022 and retired the convertible bonds due 2021, and the package came with a new $500m super senior revolving credit facility (undrawn at closing). The 7% senior notes due 1 March 2025 were unsecured and sat outside the security package, issued to refinance the 2020 notes.

In 2023 the company started buying its own paper back below par: $166m of the 2025 notes in a June tender at an average price of 60 cents, and $114m of the 2026 notes in a November tender at an average of 89.3 cents (on top of the $100m of 2026 notes that amortised every May). In December it bought another $140m of the 2025 notes at 92 cents, about $130m of cash, drawing on the $400m five-year facility from Glencore (signed the month before) to fund it. That left $492m of the 2025 notes outstanding, the exact amount repaid at maturity in March 2025. The 7% notes were repaid at maturity on 1 March 2025: $493m of principal plus accrued interest, funded with the final $270m drawn under the Glencore facility and cash on balance sheet.

The result was the inversion that set up the 2026 problem: the unsecured paper matured and was repaid in full ahead of the secured notes, which were the ones that ended up restructured. A merger with Capricorn was agreed in June 2022 and collapsed that September when Capricorn's shareholders turned against the all-share terms, arguing the deal undervalued their company; Capricorn withdrew its recommendation on 29 September 2022 and struck a merger with NewMed Energy instead. Production fell from 87 kboepd in 2019 to 40.4 in 2025. Net debt fell from $2.13bn at the end of 2021 to $1.86bn at the end of 2022 and $1.61bn at the end of 2023, then $1.45bn at the end of 2024, but never far enough.

2025 was the year the business broke. Production dropped from 51.5 to 40.4 kboepd, with Gabon gone but Jubilee also weaker: net Jubilee production fell from 33.9 to 23.7 kbopd as water broke through into wells, the risers gave trouble and the field took a 15-day shutdown. Revenue fell from $1.29bn to $847m and adjusted EBITDAX from $1.01bn to $586m. Tullow lost $129m from continuing operations after tax. Free cash flow of $99m relied on $347m of disposal proceeds from Gabon ($307m, completed 29 July 2025) and Kenya (completed 25 September 2025 against $120m paid in three $40m tranches†). Ghana was also paying late: GNPC owed Tullow $223m net at year end against $111m a year earlier, and working capital absorbed $134m. The asset sales raised c.$0.4bn in 2025 against $1.29bn of notes due in May 2026 and a $400m Glencore loan behind them. The 2026 notes' indenture carried an NPV coverage test, 2P net present value at least 1.1x net senior secured debt, and the September 2025 reserves report showed it passing at 1.6x: $966m of net senior secured debt after the Gabon proceeds, against $1.54bn of 2P NPV. So Tullow negotiated.

The company was also dealing with two outstanding tax assessments from the Ghana Revenue Authority on disallowed loan interest for 2010-2020 ($190m) and on business interruption insurance proceeds for 2016-2019, which were referred to ICC arbitration in February 2023. Tullow won the first arbitration it fought, on Branch Profit Remittance Tax, in January 2025, escaping a $320m assessment. The two assessments referred to arbitration in 2023 sat unresolved while that earlier claim was fought first; the insurance-proceeds award arrived on 30 September 2026 and went against Tullow, and the loan-interest case is due to be heard in 2027.

In the November trading update on 21 November 2025, Ian Perks, chief executive since 15 September 2025 after Rahul Dhir announced his exit the previous December and Richard Miller had served as interim, kept the line about putting Tullow on a long-term sustainable financial footing, while the strategic update said the company was engaging bondholders, commodity traders and other private funding sources on a refinancing and, with the May 2026 maturity six months out, was 'progressing alternative options with certain of its creditors, including an amend and extend exercise and other forms of liability management transactions'. That update guided year-end 2025 net debt to c.$1.2bn, put Ghana receivables above $200m net at end-October, and set 2026 guidance at 34-42 kboepd on $65 oil with c.$200m of capital expenditure and pre-financing cash flow of $70-100m.

In early '26, Tullow announces a breakthrough

On 20 February 2026, Tullow announced the Refinancing Transaction, a binding Lock-Up Agreement with holders of c.66% of the 2026 notes and with Glencore as holder of the $400m facility. The same morning it announced the extension of the Jubilee and TEN petroleum agreements to 2040 and the signing of the purchase of the TEN FPSO vessel (c.$126m net, completing at the end of Q1 2027). The company planned to implement by consent solicitation if over 90% of holders acceded, or by an English restructuring plan if they did not.

Holders of over 90% had acceded by 26 February, six days after the announcement, at which point 99.48% were in by the time the consent solicitation launched on 25 March. Requisite consents were received on 7 April, the supplemental indentures were executed on 10 April, the solicitation expired on 21 April with more than 99% in, and the transaction was effective on 27 April. The mechanics: $100m redeemed at par on 23 April, pro rata, plus accrued interest and the 1.00% cash fee; the remaining notes released; $1.19bn of new notes issued on 24 April; the $400m Glencore facility released into c.$423m of junior notes; the $100m super senior cargo prepayment put in place; $25m of additional notes subscribed by Glencore. The lock-up terminated at the effective time.

Date	Event
20 Feb 2026	Lock-Up Agreement signed with c.66% of the notes plus Glencore; consent solicitation planned above 90%, English restructuring plan as backstop. Ghana licence extensions to 2040 and TEN FPSO purchase SPA announced the same day
26 Feb 2026	Over 90% acceded, meeting the consent solicitation threshold; early-bird deadline set for 27 February
25 Mar 2026	Consent solicitation launched; 99.48% in the lock-up by that date
7 Apr 2026	Requisite consents received
10 Apr 2026	Second and third supplemental indentures executed
21 Apr 2026	Consent solicitation expired with more than 99% in
23 Apr 2026	$100m redeemed at par, pro rata, plus accrued interest and the 1.00% cash fee
24 Apr 2026	$1.19bn of new notes issued; Glencore junior notes ($423m) and cargo prepayment signed
27 Apr 2026	Transaction Effective Time; lock-up terminated. S&P to D; Moody's to Caa3
24 Jun 2026	$48m swept at 101; $1.16bn outstanding
28-30 Sep 2026	Half-year results; ICC award upheld Ghana's $196m assessment plus 100% penalties

Source: Tullow Oil plc RNS announcements, February to September 2026; 2026 half-year report, 28 September 2026

Early birds got $1,000 of new notes per $1,000 of old notes, the 1% cash fee, and a 5% fee paid in new notes allocated among them pro rata, funded by the late consenters taking $950 per $1,000. There is no haircut on principal for anyone who signed on time. The price of the extension is in the coupon, the control package and the fees, not the face amount. PJT Partners and Latham & Watkins advised the company; Houlihan Lokey and Weil Gotshal the noteholder ad hoc group; Kroll ran the solicitation; GLAS is trustee.

The reinstated cap stack

The new notes are issued by Tullow Holdco 2 Limited and guaranteed by certain subsidiaries of the group. They share first-priority transaction security with the cargo prepayment facility, pari passu. On enforcement, proceeds go first to the cargo prepayment facility, then to the 2028 notes and permitted senior secured hedging liabilities, then down the stack to the Glencore junior notes. On the transaction documents, the Ghanaian licences themselves are not mortgaged to the noteholders, and Tullow Ghana Ltd sits between the notes and the fields; the operating company also owes the tax claims, which matters now.

Instrument	Before (31 Dec 2025)	After (30 Jun 2026)
10.25% senior secured notes due May 2026	$1.285bn ($1.28bn carrying)	$100m redeemed at par; balance released
New senior secured notes due 15 November 2028	–	$1.19bn issued at close, plus $25m to Glencore; $48m swept in June; $1.16bn outstanding
Glencore secured notes facility due 2028	$400m ($381m carrying)	$400m released
Glencore junior secured notes due 15 May 2030	–	$423m, SOFR + 12.75% PIK (+0.75% if Dated Brent > $65)
Super senior cargo prepayment facility	–	$100m undrawn, drawn at SOFR + 4.50%
Super senior revolving credit facility	nil (was $150m drawn at 30 Jun 2025)	–
Net debt	$1.35bn	$1.40bn (1.9x EBITDAX)

Source: Tullow Oil plc RNS announcements, February to April 2026; 2025 annual report; 2026 half-year report, 28 September 2026

The coupon went from 10.25% to 15% all-in: 10.25% cash, 3.00% PIK and 1.75% pay-if-you-can, quarterly, with unpaid PIYC capitalising. Call protection is 101 for the life of the notes. Above a $100m minimum liquidity threshold, excess cash is swept to noteholders at 101 twice a year; the first sweep took $48m of principal out on 24 June 2026, two months after closing, leaving $1.16bn outstanding at 30 June. There are no maintenance covenants on the 2028 notes, the Glencore notes or the cargo prepayment facility.

Term	2028 notes
Issuer	Tullow Holdco 2 Limited, guaranteed by certain group subsidiaries
Size	$1.19bn issued 24 Apr 2026, plus $25m to Glencore; $1.16bn outstanding at 30 Jun 2026
Maturity	15 November 2028; brought forward to 15 May 2028 absent a binding SPA maximising asset value by 30 September 2027
Coupon	10.25% cash + 3.00% PIK + 1.75% pay-if-you-can, quarterly; 15% all-in where PIYC is paid in cash
Call protection	101 for the life of the notes
Sweep	Cash above a $100m minimum liquidity threshold swept at 101, twice a year ($48m on 24 June 2026)
Ranking	First-priority security pari passu with the $100m cargo prepayment facility; Glencore junior notes behind
Covenants	No maintenance covenants; governance conditions with an event of default on breach
ISINs	US89941AAA07 (144A) / USG9131AAA19 (RegS)
Ratings	Caa2 (Moody's, 27 April); CCC+ (S&P, 8 May); the company CCC+ at S&P and Fitch

Source: Tullow Oil plc RNS announcements, April to June 2026; 2026 half-year report, 28 September 2026

Four new independent non-executive directors joined the board, and a board sub-committee now oversees "a disciplined process of value maximisation from the Group's asset base". Breaching certain governance conditions is an event of default. Unless a binding sale and purchase agreement that maximises value from the assets is signed by 30 September 2027, the maturities of the 2028 notes and the cargo prepayment facility move up to 15 May 2028. The 2026 long-term incentive plan vests on refinancing the 2028 notes, so management gets paid when the noteholders do.

Glencore took $25m of the new notes, converted its $400m secured facility into $423m of junior notes due May 2030 paying SOFR plus 12.75% PIK, added a $100m super senior cargo prepayment (undrawn, drawn amounts at SOFR plus 4.50%), and stayed on as marketer and buyer of every cargo. S&P treated the exchange as a distressed exchange, tantamount to default, and cut to D at completion; Moody's went to Caa3. Moody's then assigned the new notes Caa2 and moved the corporate rating to Caa3 stable on 27 April. S&P rated the 2028 notes CCC+ on 8 May, and S&P and Fitch now have the company at CCC+.

Performance improved, then Ghana t

The half-year results on 28 September looked like a company coming out the other side. Production rose 7% to 43.7 kboepd with FPSO uptime above 99%. Revenue was $496m with realised oil of $95.0 per barrel before hedging and $86.3 after, with more than 60% of 2026 volumes protected by collars capped at $75 a barrel in the first half and $76 in the second; the caps sit at $90 for 2027, nothing ran beyond December 2027 at 30 June, and first-half 2028 protection has been going on since. Underlying operating cash flow was $222m against $34m a year earlier. The loss after tax of $101m carries the one-off refinancing costs (c.$62m of debt arrangement fees expensed). Free cash flow was $4m against minus $188m in the first half of 2025. 2P reserves rose to 121.7 mmboe from 100.2 at year end on the licence extensions and drilling success; reserves had fallen from 164.5 mmboe at the end of 2024 to 113.8 by 30 June 2025 before the extensions converted 18.2 mmboe of Jubilee and TEN contingent resources into 2P. Net debt was $1.40bn, 1.9x EBITDAX, with liquidity headroom above $250m. Tullow lifted its 2026 free cash flow guidance to $170-250m in August and expects to finish at the high end of 34-42 kboepd, lifting 14 cargoes in 2026.

The outstanding receivable from Ghana stood at $225m at the end of 2025: $65m of cash calls, $110m of gas payments and $50m of TEN development debt. By 30 June the gas element was down to $64m: Tullow wrote off $14m of accumulated interest as not recoverable alongside what it collected, and the remainder was settled by 28 September. Management expects a large share of what is left to arrive by the end of 2026 and earns interest on the balance; the $65m of cash-call recovery sits inside the free cash flow guidance, which started the year at $70-175m before August's upgrade to $170-250m. The company took a further $30m provision on the disputed tax assessments.

Six days later the ICC tribunal delivered its award on the insurance-proceeds assessment. Tullow lost the arbitration. The tribunal ruled that Ghana's $196m corporate income tax assessment on insurance proceeds received in 2016 to 2019 stands: it does not breach the Petroleum Agreements, the 100% penalties attached to it fall outside their protections, the claim was not time-barred, and the Revenue Authority acted lawfully in enforcing it. Tullow said it is disappointed and will consider next steps after further engagement with the Government of Ghana. The shares had their worst day since December 2019, falling about 47% on 30 September to close at 10.26p, down from 19.5p the previous evening. A separate $190m case on disallowed loan interest is due to be heard in 2027, and the Ministry has said it wants to discuss both matters together. Between the two disputed assessments ($387m at 30 June) and a $170m Kenyan assessment arising from the Kenya sale, the tax claims now rival the equity, worth about £175m, c.$230m.

The ruling settled the size of the bill and left the schedule open, and the schedule is what matters for a bond due in May 2028. Ghana's statement gives the Revenue Authority the power to set the time and manner of payment, while undertaking to implement the award in a way that preserves Tullow's ability to keep operating and investing as a going concern.

Where it trades

The shares trade at 12.20p on 19 October 2026, down 90%+ since early 2019. The 2028 notes trade around 95c today, well off the recent highs close to 104c. At 95c the yield to May 2028 is about 21% with the PIK coupons capitalising, or about 16% if every coupon is paid in cash. The 2026 notes traded near 80c before the lock-up was agreed.

What we are watching next

Ghana's payment terms. The Revenue Authority sets the time and manner of the $393m. Instalments through 2027-29 support the notes; a fast collection, or set-off against gas payments or liftings, drains cash before the refinancing window closes.
The November sweep. The next semi-annual sweep falls on 15 November 2026. Its size will show how much cash is being held back for Ghana.
The refinancing. Management targets a bank-led refinancing of the whole $1.61bn structure by the end of 2026, which would call the notes at 101. Nothing has been announced as of 14 October.
The sale process. The board sub-committee's value maximisation process is the alternative to a refinancing, and the indenture's deadline does the rest: sale agreement by 30 September 2027, or maturity on 15 May 2028.
The second tax case. The $190m loan-interest arbitration lands in 2027, after the November sweep and before the deadline.

Note

† Kenya sale terms: the first tranche paid at completion, the second in March 2026, the third deferred to no later than June 2033, payable $2m a quarter from the second half of 2028 while Brent averages at least $65 a barrel and otherwise as a bullet. In July 2026 the buyer paid a further $9m to terminate Tullow's Kenyan royalty, a quarterly $0.50 per barrel on 80% of production, and a 30% back-in right over future development phases.