Oil exploration and production company Tullow Oil (TLW) is set to drop out of the FTSE 100 on Monday (24 Mar) after a seven-and-a-half year stay but it is going out with a bang not a whimper – managing a 3.7% rise to 321p.

Web chart - Tullow - March 15

This follows news that it has secured an additional $450 million of headroom on its existing credit facilities. Not only does this offer some much needed breathing space it also represents a vote of confidence in the business and its prospects from its major creditors.

Total committed debt facilities are now around $6.3 billion with no near-term maturities. Tullow's lenders agree to extend existing commitments by $200 million, increasing available debt to $3.7 billion. It also secures an additional $250 million through a corporate debt facility that has now risen to $1 billion.

It has been a testing time for Tullow shareholders in recent years with the share price beginning to wane in 2012 as it failed to repeat a historically-excellent touch with exploration. This was exacerbated by the collapse in crude oil prices and earlier this month it emerged that the flagship TEN project in Ghana might be impacted by a maritime border dispute with the Ivory Coast.

Barclays' 'overweight' rating and 550p price target remains unchanged and it adds: 'Following the recent escalation of the Ghana-Cote D’Ivoire maritime boundary dispute that impacts the TEN development, we see the expansion of the RBL (reserves based lending facility) as an endorsement of management’s (and our own) view that the dispute should not alter the pace of development activity.'

Westhouse also stays at 'buy' with a 600p price target and comments: 'This is a positive update and we believe that the increase in funding facilities is a testament to Tullow's low-cost, high-margin production which is set to increase by over 60% between 2015 and 2017.'

Issue Date: 20 Mar 2015