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RNS Number : 3957G
Tullow Oil PLC
25 November 2020
News Release
Tullow Oil plc - 2020 Capital Markets Day
- New strategy and plan to generate c. $7 billion of operating cashflow over the next 10 years
- Plan focuses over 90% of future capital expenditure on
Tullow's West African producing assets
- Investment of c. $2.7 billion from 2021-30 delivers c. $4
billion cash flow for debt service and value growth
- 2020 Group production averages 75,000 bopd to date; Full Year
guidance remains 73,000 to 77,000 bopd
25 November 2020 - Tullow Oil plc will be holding a Capital
Markets Day from 9am GMT today which will be hosted by Rahul Dhir,
Chief Executive Officer; Les Wood, Chief Financial Officer; Wissam
Al-Monthiry, Managing Director, Ghana; and Julia Ross, Director,
People & Sustainability. Instructions for joining this virtual
event can be found at the bottom of this release.
Significant value underpinned by a large resource base and focus
on costs
During today's event, the team will present Tullow's new
strategy and plan which focuses on the substantial potential within
Tullow's large resource base associated with its producing assets
where there is extensive infrastructure in place. In Ghana, for
example, Tullow has produced just 400 million barrels of oil
(gross) from 2.9 billion barrels of oil in place (c.14%). This
plan, alongside a rigorous focus on costs, is expected to generate
material cash flow over the next decade, which the Group
anticipates will enable reduction of its current debt levels and
deliver significant value for its host nations and investors.
The new plan will deliver production growth in the medium term
and the ability to sustain production over the longer term. The
first phase of investment will start in the second quarter of 2021
with the commencement of a multi-well drilling programme in
Ghana.
Delivering high-margin, self-funded production and strong cash
flows
Assuming an oil price of $45 per barrel in 2021 and $55 per
barrel flat nominal from 2022 onwards, and with over 90% of future
capital expenditure focused on the Group's West African producing
assets, Tullow forecasts it will generate c. $7 billion of
operating cashflow over the next 10 years. After capital investment
of c. $2.7 billion, there will be c.$4 billion cash flow available
for debt service and shareholder returns which Tullow will
initially apply towards reducing gearing to 1-2x net debt / EBITDAX
while retaining appropriate liquidity.
Following the successful $575 million sale of its Ugandan
assets, Tullow will continue to consider additional asset sales,
provided they are value accretive and strengthen the balance sheet.
However, in light of the material cost savings that the Group has
realised and the cash flow generation from this new plan, there is
now less urgency to sell additional assets.
Material options to generate additional returns
Tullow has considerable opportunities to unlock value in Kenya
and South America. These require an innovative approach and a deep
geoscience and engineering expertise but do not require significant
capital investment in the evaluation phase.
In Kenya, Tullow is in the process of re-assessing Project Oil
Kenya to design an economic project at low oil prices whilst
preserving the phased development concept.
In South America, Tullow has material positions in emerging
basins with substantial acreage in Suriname, Guyana and Argentina.
Tullow's current focus is to better understand the prospectivity in
these basins.
Operational Update
Group working interest production to date in 2020 has averaged
75,000 bopd in line with expectations. Full year guidance remains
73,000 to 77,000 bopd, reflecting continued good performance across
the portfolio.
In Kenya, Tullow and its Joint Venture Partners are working with
the Government on an extension to their exploration licences to the
end of 2021.
In Suriname, the prospective Goliathberg-Voltzberg North-1 well
is on schedule to spud in Q1 2021.
Rahul Dhir, Chief Executive Officer of Tullow Oil Plc, commented
today:
"Since joining Tullow in July 2020 I have been deeply impressed
by the strength of the Group's assets, especially in Ghana.
Following hard work by our team, and with input from our partners
and external experts, we have a clear strategy and plan for the
next 10 years. The plan focuses our capital on a deep portfolio of
short-cycle, high-return opportunities within our current producing
asset base and will ensure that Tullow can meet its financial
obligations and deliver material value for our host nations and
investors."
Capital Markets Day - joining instructions:
A webcast of the presentation will be broadcast live - Watch
here .
A replay of the webcast will be available on our website - Here
.
To ask a question, please dial into the conference call. Please
dial-in ten minutes prior to the 9.00am scheduled start time and
enter the "Event Plus Passcode" shown below:
Free phone (UK): 0800 694 1461
Tel: +44 (0) 203 009 5709
Event Plus Passcode : 27 09 187
CONTACTS
Tullow Oil plc Murrays
(London) (Dublin)
(+44 20 3249 9000) (+353 1 498 0300)
Chris Perry, Matthew Evans (Investors) Pat Walsh
George Cazenove (Media) Joe Heron
======================================== ===================
Notes to editors
Tullow is an independent oil and gas, exploration and production
group, quoted on the London, Irish and Ghanaian stock exchanges
(symbol: TLW). The Group has interests in over 70 exploration and
production licences across 15 countries.
For further information, please refer to our website at
www.tullowoil.com.
Follow Tullow on:
Twitter: www.twitter.com/TullowOilplc
YouTube: www.youtube.com/TullowOilplc
Facebook: www.facebook.com/TullowOilplc
LinkedIn: www.linkedin.com/company/Tullow-Oil
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