TIDMTLW
RNS Number : 6699A
Tullow Oil PLC
24 January 2024
Tullow Oil plc
January Trading Statement
2023 free cash flow ahead of expectations
Start-up of Jubilee South East drives production and cash flow
growth
On track to continue material debt reduction
24 January 2024 - Tullow Oil plc (Tullow) issues the following
statement in advance of the Group's 2023 Full Year Results
scheduled to be announced on 6 March 2024. The information
contained herein has not been audited and may be subject to further
review and amendment.
Rahul Dhir, Chief Executive Officer, Tullow, commented
today:
"Continued delivery of our business plan in 2023 resulted in a
major inflection point as we moved from a period of investment
focus to delivery of free cash flow growth. We are on track to
deliver c.$600 million free cash flow over the next two years to
achieve our stated target of c.$ 800 million of free cash flow from
2023 to 2025 at $80/bbl. The debt facility agreed with Glencore is
a strong endorsement of our business plan and we have no material
uncovered debt maturities until May 2026. At the same time our
assets are expected to deliver production growth, while we continue
to maintain our laser focus on operational excellence and capital
discipline."
2023 Performance - Delivery during a transformative year
Operational
-- Full year working interest production averaged c.63 kboepd in
2023, including c.6 kboepd of Jubilee gas.
-- Water injection issues at Jubilee encountered in 2023, have now been resolved.
-- Excellent drilling performance with four Jubilee producer and
three Jubilee water injection wells brought onstream.
-- Start-up of Jubilee South East marking a material step up in
Jubilee production that surpassed 100 kbopd.
-- Gabon swap agreement and licence extensions boost reserves
and centre portfolio around Tchatamba production hub.
-- Continued portfolio optimisation through sale of Orinduik
licence in Guyana to focus on core production assets.
Financial
-- Revenue of c.$1.6 billion (including c.$140 million hedge
costs) at an average realised oil price (post-hedging) of
$77.5/bbl.
-- Capital and decommissioning expenditure were c.$380 million
and c.$70 million, respectively.
-- Underlying operating cash flow(1) of c.$800 million and free
cash flow of c.$170 million, ahead of guidance.
-- Net debt reduction of c.$250 million resulting in year-end
net debt of c.$1.6 billion and gearing of 1.4 times, ahead of
target of 1.5 times.
-- Gross debt reduction of c.$400 million from tenders of the
2025 and 2026 notes combined with annual amortisations.
-- Executed material step in refinancing strategy with new $400
million debt facility agreed with Glencore.
-- Ghana gas commercialisation via interim gas sales agreement,
delivering c.$30 million revenue.
2024 Outlook - Focus on free cash flow generation
Operational
-- Group working interest production expected to average between
62 to 68 kboepd, including c.7 kboepd of gas.
-- Five Jubilee wells (three producers and two water injectors)
expected to come onstream in 2024. This will conclude the activity
planned at the start of the drilling programme approximately six
months ahead of schedule with excellent drilling performance.
-- Later in 2024, Tullow and its Joint Venture Partners intend
to take a drilling break in Ghana while existing well stock
sustains production at Jubilee, and TEN decline continues to be
effectively minimised. Drilling is expected to resume in 2025, and
the procurement process for a new rig will commence in 2024.
-- Activity in the non-operated portfolio will focus on infill
drilling and an infrastructure-led exploration well at the Simba
licence.
Financial
-- 2024 capital expenditure of c.$250 million with approximately
60% allocated to Jubilee and 25% to non-operated assets.
-- Decommissioning spend of c.$50 million for UK and Mauritania;
c.$20 million provisioning for Ghana and Gabon.
-- Cash taxes expected to be c.$350 million at $80/bbl with
payments weighted to the first half of the year.
-- Hedge portfolio protects c.60% of forecast sales volumes at
weighted average price of $58/bbl through the year; material
uncapped exposure to oil price upside from June once legacy hedges
have rolled off, with c.20% of sales volumes capped at weighted
average price of $114/bbl for the period June to December.
-- Forecast free cash flow of $200-300 million at $80/bbl, with
the range largely driven by timing of revenue receipts for 18 to 19
cargoes lifted in Ghana during the year.
-- Year-end net debt expected to be less than $1.4 billion; cash
gearing of net debt to EBITDAX expected to be around one times at
$80/bbl.
-- On track to deliver targeted c.$800 million free cash flow
over 2023 to 2025 period, with over $600 million free cash flow
expected to be generated over 2024 to 2025 at $80/bbl.
Group production (kboepd) 62-68
------------------------------------- -------
Ghana oil (kbopd) 48
------------------------------------- -------
Jubilee oil (kbopd) 39
------------------------------------- -------
TEN oil (kbopd) 9
------------------------------------- -------
Non-operated portfolio oil (kbopd) 11
------------------------------------- -------
Gas production (kboepd) 7
------------------------------------- -------
Group capital expenditure ($m) 250
------------------------------------- -------
Ghana 160
------------------------------------- -------
Jubilee 145
------------------------------------- -------
TEN 15
------------------------------------- -------
Non-operated portfolio 60
------------------------------------- -------
Kenya 10
------------------------------------- -------
Exploration 20
===================================== =======
CONTACTS
========================= ===================
Tullow Investor Relations Camarco (Media)
ir@tullowoil.com (+44 20 3781 9244)
Nicola Rogers Billy Clegg
Matthew Evans Andrew Turner
Rebecca Waterworth
========================= ===================
Notes to editors
Tullow is an independent energy company that is building a
better future through responsible oil and gas development in
Africa. The Company's operations are focused on its West-African
producing assets in Ghana, Gabon and Côte d'Ivoire, alongside a
material discovered resource base in Kenya. Tullow is committed to
becoming Net Zero on its Scope 1 and 2 emissions by 2030 and has a
Shared Prosperity strategy that delivers lasting socio-economic
benefits for its host nations. The Group is quoted on the London
and Ghanaian stock exchanges (symbol: TLW). For further
information, please refer to: 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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END
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