Tullow Oil has proposed a 25-for-49 fully underwritten rights issue to raise about £607m (or, c.$750m) at a discounted 130p a share, as it moves to reduce debt.
Separately, Tullow Oil said it has agreed to a Uganda farm-down that once complete would mean it had ceased to be an operator in that country, but would retain a presence in-country to manage its non-operated position.
Returning to the rights issue, Tullow Oil said it required shareholder approval and would comprise about 466.9m new shares.
"In light of its high level of debt and the resultant lack of financial flexibility, the group intends to accelerate the reduction of its debt towards its gearing policy of less than 2.5x net debt/Adjusted EBITDAX," said Tullow Oil in a statement.
This would be achieved via a combination of net proceeds from the rights issue, improving cash flow from production growth, and value enhancing portfolio management activities, including future asset sales and farm-downs.
The rights issued was at a a discount of about 45.2% to the closing price of 237.3p on March 16 March, and at a discount of about 35.3% to the theoretical ex-rights price of 201.1p per new share calculated by reference to the closing price on the same day.
Meantime, Tullow said it had agreed to farm-down 21.57% of its 33.33% interests in Exploration Areas 1, 1A, 2 and 3A in Uganda to Total E&P Uganda B.V. (Total) for a total consideration of $900m.
CNOOC Uganda Ltd had notified Tullow that it had exercised its pre-emption rights under the joint operating agreements between Tullow, Total and CNOOC to acquire 50% of the interests being transferred to Total on the same terms and conditions that were agreed between Tullow and Total.
Completion of the farm-down was subject to certain conditions, including the approval of the Government of Uganda.
"Once the farm-down has completed, Tullow will cease to be an operator in Uganda but will retain a presence in-country to manage its non-operated position," the company said.