Tullow Oil estimates to spend approximately $170 Million in Kenya’s Pre-Development, Exploration & Appraisal Activity in 2018 a majority of which is set aside for Exploration and Appraisal at $90 million and pre-development expenditure of $80 million.
The capital expenditure in 2018 is a drop from last year’s set expenditure of $225 million where $100M was set for pre-development expenditure and $125 million of Exploration and Appraisal spend. This is despite Tullow Oil having increased the overall capital spend from $500 million to $570 million including $110 million of forecast Uganda expenditure which will be repaid from deferred consideration post the completion of the Uganda farm-down, which is expected in the first half of the year.
At completion of the Uganda farm-down, Tullow is also due to receive $100 million cash consideration along with re-imbursement of 2017 estimated capex of $60 million. A further $50 million cash consideration is due to be received when FID is achieved.
Tullow says its field operations in Kenya in 2018 will mostly involve the Early Oil Pilot Scheme (EOPS) and the overall development plan for the discovered resources following the conclusion of the 2017 exploration and appraisal drilling campaign. Work is already under way on the EOPS, with initial injectivity testing commencing on Ngamia-11 and oil production and water injection facilities being constructed in the field ready to commence production/injection in the first quarter of 2018. Oil produced will initially be stored until all necessary consents and approvals are granted and work is completed for the transfer of crude oil to Mombasa by road.
On the development plan the company reports significant progress with Tullow Oil having re-engaged with representatives of the Government of Kenya on the overall approach and timelines for progressing the development. The Environmental and Social Impact Assessment (ESIA) for the overall field development according to the Irish explorer is on track to commence later in the first quarter of 2018. The assessment of discovered resources and plans for development of the South Lokichar basin will be provided during the Full Year Results on 7 February 2018.
Meanwhile Tullow Oil expects to report estimated revenues of$1.7 billion and gross profit of $0.8 billion for 2017.
Read this and extra information of the expected upstream activity in Kenya in 2018 from our 2018 Kenya Upstream Sector Outlook. Also available are Tanzania and Uganda versions. Contact: email@example.com +254724684368