• Tullow Oil narrowly survived a brutal 2025, but a $223 million pile of unpaid bills from Ghana now fully exposes its single-country gamble

• The British producer is now betting its entire turnaround on Brent holding near $90 a barrel and on the Ghanaian state honouring its debts

• Refinancing closed, Petroleum Agreements extended to 2040, production above guidance — the foundations are real, but execution risk is high

Tullow Oil Plc, the London-listed independent oil and gas producer that has reshaped itself around Ghana, ended 2025 with $223 million owed by the Ghanaian state — twice the figure carried on its books a year earlier. The exposure, disclosed Tuesday in the company's full-year results, has effectively become a sovereign credit position for a private oil major: a single-counterparty bet on a government still emerging from a domestic debt restructuring and operating under an International Monetary Fund programme.

The amount owed by the Ghana National Petroleum Corporation and the wider state apparatus falls into three categories. Around $65 million relates to unpaid joint-venture cash calls — the routine working-capital top-ups Tullow's partners are contractually bound to pay. A further $108 million stems from gas sold to Ghana's domestic power grid that remains unpaid. The remaining $50 million is a legacy receivable tied to the development of the Tweneboa-Enyenra-Ntomme (TEN) fields. All three lines have grown materially since 2024, when the total stood at $111 million.

Hidden Counterparty

The doubling of the receivable matters more than the headline number. Ghana's currency, the cedi, lost ground through 2025 against the dollar, hard-currency reserves remained tight, and the country was still implementing the spending discipline tied to its $3 billion IMF Extended Credit Facility agreed in 2023. In that context, paying foreign oil operators on time has not been an obvious priority for Accra. Tullow's own framing in its 2026 cash flow guidance is telling: the company has explicitly excluded the historic $108 million of gas receivables and the $50 million debt related to the TEN fields from its forward projections, recovering only the $65 million of cash calls. In substance, management is conceding these flows may take years to come in.

A new Master Gas Agreement signed earlier in 2026 introduces a payment security mechanism for future gas deliveries, alongside an escalating reference price of $2.50 per million British thermal units. That is genuine progress. But the mechanism protects future flows, not the existing stock of arrears. Tullow is therefore in the awkward position of having simultaneously secured better forward terms while quietly writing off a portion of past dues from its working capital plan.

The Ghana exposure compounds an already long list of unresolved challenges. Two arbitration cases at the International Chamber of Commerce remain open against the Ghana Revenue Authority: a $190 million corporate income tax assessment on disallowed loan interest, with a tribunal hearing now pushed to September, and a $196 million claim relating to insurance proceeds, with a ruling expected mid-year. A separate $170 million tax assessment from the Kenya Revenue Authority on the disposal of Tullow's Kenyan subsidiary is being contested as, in the company's words, "wholly without merit." The cumulative contingent tax exposure across jurisdictions sits at $583 million. Production fell 22% in 2025 to 40,400 barrels of oil equivalent per day. Continuing operations posted a net loss of $129 million. Net debt-to-earnings leverage rose to 2.3 times from 1.4 times. The headline $7 million group profit existed only because of the $165 million pre-tax gain on the sale of Tullow's Gabonese assets — a one-off the company cannot repeat.

The bet on $90 a barrel of oil

The lifeline came on April 27, when Tullow closed a comprehensive refinancing that pushed its main bond maturity from May 2026 to November 2028 and extended a separate $400 million facility from Glencore to May 2030. More than 97% of bondholders consented. The deal converts a portion of interest into payment-in-kind, cutting cash interest costs from $216 million in 2025 to a forecast $130 million in 2026. It also adds a $100 million liquidity buffer through a cargo prepayment line.

Operationally, the picture has brightened. First-quarter 2026 production reached 43,400 barrels of oil equivalent per day, above the upper end of the full-year range. Three new Jubilee wells are already onstream, with four more due before September. The Ghanaian Parliament ratified an extension of the Jubilee and TEN petroleum agreements to 2040. The April cargo sold at roughly $130 a barrel, a record for the company, as buyers paid a premium for West African light-sweet crude amid Middle East tensions.

Free cash flow guidance for 2026 ranges from $70 million to $175 million at oil prices between $70 and $100 a barrel. The midpoint of that range — and the implicit anchor of management's plan — sits close to $90 a barrel. Below $70, the model tightens sharply. Above $100, every additional $10 generates roughly $30 million of incremental cash. In effect, Tullow has bought itself two years of runway through refinancing and is now wagering that geopolitical risk premia keep Brent elevated long enough to deleverage organically and unlock the value of its Ghanaian reserves. The next test arrives with the half-year results in July.

Idriss Linge