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RNS Number : 1367F
Tullow Oil PLC
14 July 2021
TULLOW OIL PLC
Trading Statement and Operational Update
14 JULY 2021 - Tullow Oil plc (Tullow) issues this update and
guidance in advance of the Group's 2021 Half Year Results, which
are scheduled for release on 15 September 2021. The information
contained herein has not been audited and may be subject to further
review and amendment.
Rahul Dhir, Chief Executive Officer, Tullow Oil plc, commented
today:
"I am pleased to report that Tullow has made excellent
operational and financial progress in the first half of 2021. Our
producing fields in West Africa are performing well and we have
successfully started our drilling programme in Ghana. This strong
operational performance, combined with continued capital
discipline, improved market conditions and asset sales in Gabon and
Equatorial Guinea, supported our transformational debt refinancing.
Tullow now has a strong financial footing and we are making very
good progress in delivering on our highly cash generative business
plan and continuing to reduce our debt."
OPerational update
Production
Group working interest production in the first half of 2021
averaged 61,200 bopd, in line with expectations. Full year 2021
guidance has been revised to 55,000 - 61,000 bopd (from 60,000 -
66,000 bopd). The guidance reflects the sales of the Equatorial
Guinea assets and the Dussafu Marin permit and first half
delivery.
Ghana
-- In the first half of 2021, Jubilee gross production was
slightly ahead of expectations, averaging 70,600 bopd (net 25,100
bopd). TEN gross production averaged 37,000 bopd (net 17,400 bopd).
Combined FPSO uptime was in excess of 98%.
-- Improved gas offtake and increased water injection rates in
Jubilee have been sustained, averaging between 110-130 mmscf/d and
over 200 kbw/d, respectively.
-- The 2021 drilling campaign is progressing well. The first
Jubilee producer (J-56) is now onstream with encouraging initial
flow rates. The well is adding c.10 kbopd to the Jubilee field
rate, slightly ahead of pre-drill expectations. The rig is now
completing a Jubilee water injector (J-55 WI) with tie-in expected
in the third quarter of the year.
-- The rig will then move on to drill a TEN gas injector and a
second Jubilee producer, with tie-in expected in late 2021 and
early 2022, respectively.
-- As a result of the new wells, average production from Jubilee
is expected to increase in the second half of the year before
growing further in 2022 as the drilling campaign continues.
Non-operated
-- In the first half of 2021, net production from the
non-operated portfolio was 18,800 bopd, in line with
expectations.
-- Following the sale of assets in Equatorial Guinea and the
Dussafu Marin permit in Gabon, some capital expenditure has been
re-allocated to accelerate the Simba expansion development in
Gabon. Development of this low-risk, high-return project is
expected to commence in the third quarter of 2021 with a positive
impact on 2021/2022 production.
Kenya
-- The Kenya project has been through a full redesign using data
from the 2018-2020 Early Oil Pilot Scheme (EOPS) being fed into the
model which is providing better understanding of both the resource
and the optimum development plan.
-- The technical work is complete, and the resource volumes are
being audited by Gaffney Cline Associates (GCA) ahead of detailed
project plan discussions with the Government of Kenya over the
coming months.
-- Tullow and its JV Partners expect to provide a project update
to the market in the second half of 2021.
Exploration
-- In the emerging and maturing basins of Guyana, Suriname,
Argentina and Côte d'Ivoire, prospect maturation continues across
the exploration portfolio to unlock value from the substantial
prospective resources identified.
-- Around the Group's producing assets in Ghana, Côte d'Ivoire
and Gabon, the exploration team are maturing several near field and
infrastructure-led opportunities as potential future drilling
candidates.
-- Separately, Tullow has exited Blocks Z38 and Z64 in Peru and PEL 0037 in Namibia.
FINANCIAL UPDATE
First half of 2021
-- On 17 May 2021, Tullow completed a comprehensive refinancing
of its debt, successfully issuing $1.8 billion of Senior Secured
Notes with five-year maturity. The Group also entered into a new
$500 million Super Senior Revolving Credit Facility, which will
primarily be used for working capital purposes.
-- Tullow completed the sales of its Equatorial Guinea assets
and the Dussafu Marin permit in Gabon to Panoro in March and June
respectively, receiving c.$133 million. These transactions also
include further contingent cash payments of up to $40 million
linked to asset performance and oil price.
-- Following the completion of Tullow's comprehensive
refinancing and as part of the preparation of statutory accounts,
the Group has completed a reassessment of its going concern status.
As a result, Tullow expects to prepare its financial statements for
the six months ending 30 June 2021 on a going concern basis with no
material uncertainty.
-- Revenue for the first half of 2021 is expected to be c.$0.7
billion with a realised oil price of $58/bbl, including hedge costs
of c.$50 million.
-- First half underlying operating cashflow(1) is expected to be
c.$0.2 billion. Pre-financing cash flow for the same period is also
expected to be c.$0.2 billion with disposal proceeds largely
offsetting capex and decommissioning spend.
-- At 30 June 2021, net debt is expected to be c.$2.3 billion
and liquidity headroom and free cash are expected to be c.$0.7
billion.
-- Capital expenditure for the first six months of the year was c.$100 million.
-- As of 30 June 2021, Tullow's hedge portfolio provides
downside protection for 51% of forecast production entitlements
through to May 2023 and 29% for a further 12 months to May 2024.
Since completion of the comprehensive debt refinancing in May, new
hedges have been placed with $55/bbl floors and weighted average
sold calls of c.$70/bbl.
Full year guidance
-- Full year Group capital expenditure is expected to be c.$250
million (previously $265 million), reflecting the reduction in
capex following the sales of the Equatorial Guinea assets and the
Dussafu Marin permit in Gabon, offset in part by the acceleration
of the Simba expansion development in Gabon.
-- Assuming $60/bbl for the remainder of the year, full year
underlying operating cashflow(1) is expected to be c.$0.6 billion
and pre-financing cash flow is expected to be c.$0.4 billion(2) .
If oil price averages $70/bbl for the remainder of the year, these
figures would increase by c.$50 million.
-- Cash financing costs for 2021 are expected to be c.$290
million, including c.$60 million of fees associated with
refinancing activities.
-- A Final Investment Decision for the Lake Albert Development
in Uganda is expected to be taken this year and would trigger a $75
million payment to Tullow from Total.
Group average working interest 1H 21 actuals (kbopd) FY 2021 guidance
production (kbopd)
================================ ====================== =================
Ghana 42.5 41.5
================================ ====================== =================
Jubilee 25.1 25.5
================================ ====================== =================
TEN 17.4 16.0
================================ ====================== =================
Equatorial Guinea(3) 2.1 1.0
================================ ====================== =================
Gabon(4) 14.8 15.0
================================ ====================== =================
C ô te d'Ivoire 1.8 1.5
================================ ====================== =================
Oil production 61.2 59.0
================================ ====================== =================
1 Cash flow from operating activities including lease payments,
before capital investment, decommissioning expenditure and debt
service
2 Assumes $75 million proceeds from Uganda FID payment
3 Reflects completion of the sale of the Equatorial Guinea
assets on 31 March 2021
4 Reflects completion of the sale of the Dussafu Marin permit in
Gabon on 9 June 2021
Hedge portfolio as of 2H 2021 2022 2023 2024
30 June
======================== ======== ======== ======== ========
Hedged volume (bopd) 40,000 23,400 20,000 6,800
======================== ======== ======== ======== ========
Weighted average floor $48/bbl $48/bbl $55/bbl $55/bbl
======================== ======== ======== ======== ========
Weighted average sold $67/bbl $72/bbl $69/bbl $69/bbl
call
======================== ======== ======== ======== ========
CONTACTS
============================================= ===================
Tullow Oil plc Murrays
(London) (Dublin)
(+44 20 3249 9000) (+353 1 498 0300)
George Cazenove (Media) Pat Walsh
Nicola Rogers and Matthew Evans (Investors) Joe Heron
============================================= ===================
Notes to editors
Tullow is an independent oil & gas company, quoted on the
London, Irish and Ghanaian stock exchanges (symbol: TLW). The Group
has interests in over 40 exploration and production licences across
11 countries, including Ghana where it operates the Jubilee and TEN
fields. In March 2021, Tullow committed to becoming Net Zero on its
Scope 1 and 2 emissions by 2030.
For further information, please refer to our website at
www.tullowoil.com.
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Facebook: www.facebook.com/TullowOilplc
LinkedIn: www.linkedin.com/company/Tullow-Oil
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