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S&P downgrades Tullow Oil following production cuts, exec resignations

S&P Global Ratings downgraded Tullow Oil PLC's long term issuer rating to B from B+, with a negative outlook.

The downgrade follows a series of negative announcements from the company that Ratings said makes it less robust than it envisioned earlier this year, according to a Dec. 13 news release.

Tullow had reduced its 2019 guidance for the third time, with year-end 2019 production projected at about 87,000 barrels of oil per day. The company also indicated that its oil finds off Guyana are not as valuable as first expected due to the oil being tough-to-produce, viscous heavy crude. Tullow was also forced to cancel a deal to sell stakes in Ugandan licenses to French oil major TOTAL SA and China's CNOOC Ltd. which Ratings assumed would bring in proceeds of about $250 million in 2019 and 2020.

The company also announced that it expects production to average between 70,000 bbl/d and 80,000 bbl/d in 2020, as well as an average of about 70,000 bbl/d through 2021 and 2023. The announcement also included the resignation of its CEO Paul McDade and exploration director Angus McCoss.

The negative outlook indicates that the rating agency could lower its rating on Tullow in the coming six to 12 months if its credit metrics deteriorated further due to lower production or oil prices, or if Ratings saw a worsening liquidity position.

This S&P Global Market Intelligence news article may contain information about credit ratings issued by S&P Global Ratings. Descriptions in this news article were not prepared by S&P Global Ratings.