Tullow refinances Norwegian loan facility

Oil explorer Tullow Oil has increased the size of its loan facility for exploration in Norway from Norwegian krone (NOK) 2 billion (£196.89 million) to NOK 3 billion and is extending its availability to the end of 2017.

The facility, which is a fully committed revolving credit facility, replaces one that had been due to expire at the end of 2014, and had been put in place for Spring Energy before it was bought by Tullow in January last year.

Spring brought with it 13 licences, of which four were operated in Norway's 2012 Awards in Predefined Areas licensing round.

The licences are located in the three main areas of the highly prospective Norwegian Continental Shelf, the North Sea, Norwegian Sea and the Barents Sea.

Chief financial officer Ian Springett said financial groups DNB and SEB acted as bookrunners and coordinating banks for the facility, which was oversubscribed.

"This NOK 3 billion facility provides pre-funding for approximately 75% of our exploration and appraisal investment on the Norwegian Continental Shelf.

"The significant oversubscription demonstrates the strength of our banking relationships and our ability to access debt capital markets. We remain in an excellent position to fund all our activities across the portfolio with strong liquidity and considerable financial flexibility," said Springett.

In May the company announced it had failed to find hydrocarbons at the Gotama well in offshore Norway, saying exploration at the well did not encounter reservoir quality sandstones in the Upper Jurassic main target. The well has now been plugged and abandoned.

Tullow, which has interests in over 140 exploration and production licences across 24 countries, yesterday had its "outperform" rating restated by analysts at BNP Paribas with a 1,120p target price on the stock, suggesting a potential upside of well over 30% from the stock's previous close. The shares rose 0.65% to 847.5p in early trading.