Tullow Oil (Tullow) announces its Half Year results for the six months ended 30 June 2022.

2022 First Half Results Summary

  • Group working interest production for the first half of 2022 averaged 60.9 kboepd, in line with expectations.
  • Ghanaian drilling programme ahead of schedule, having completed two previously drilled wells and drilled and completed another three wells. A further six wells are expected to be drilled and two of these completed by year-end.
  • Operational delivery: continued strong FPSO uptime (Jubilee c.95% and TEN c.99%), gas export (averaging c.90 mmscfd) and water injection (Jubilee c.170 kbwpd and TEN c.65 kbwpd).
  • Reserves of 242 million barrels as of 30 June, valued at c.$4.7 billion after hedging (c.$5.3 billion before hedging).1
  • Revenue of $846 million with realised oil price of $87/bbl after hedging; gross profit of $620 million; profit after tax of $264 million; underlying operating cash flow of $165 million.
  • First half free cash flow of $(205) million (negative), which includes an arbitration payment of $76 million (outflow), Uganda FID payment of $75 million (inflow) and Ghana pre-emption consideration of $126 million (outflow), but excludes the benefit of over $200 million revenue relating to two Ghana liftings, which took place in early June but for which cash was received shortly after 30 June 2022, on 1 and 5 July respectively.
  • Capital investment in the first half of 2022 was c.$156 million plus decommissioning costs of c.$29 million.
  • Net debt at 30 June 2022 of c.$2.3 billion; Gearing reduced to 1.9x net debt/EBITDAX; liquidity headroom and free cash of $0.6 billion.
  • Pre-emption of Deep Water Tano component of Kosmos Energy/Occidental Petroleum Ghana transaction successfully completed.
  • 2022 Guidance
    • Group working interest production narrowed to 60-64 kboepd.
    • Full year capital investment and decommissioning spend of c.$380 million and c.$100 million, respectively. Increase of $30 million associated with additional equity following pre-emption in Ghana.
    • Full year underlying operating cashflow expected to be c.$950 million, assuming an average oil price of $95/bbl. Post all costs, Tullow forecasts full year free cash flow of c.$200 million and gearing of <1.5x (net debt/EBITDAX) by year-end.
    • Free cash flow guidance includes the c.$75 million contingent consideration in relation to Tullow’s sale of its assets in Uganda to TotalEnergies, a payment of c.$76 million in relation to the arbitration award in favour of HiTec Vision regarding the purchase of Spring Energy in 2013 and a c.$126 million payment for the completion of the pre-emption related to the sale of Occidental Petroleum’s interests in the Jubilee and TEN fields in Ghana to Kosmos Energy.
    • Rahul Dhir, Chief Executive Officer, Tullow Oil plc, commented today:

      “The turnaround of Tullow has gained momentum in the first half of 2022, with solid production from our West African portfolio driving stronger financial performance. We added material, unhedged production in Ghana through the pre-emption of the Kosmos-Oxy deal and took over the Operations & Maintenance (O&M) of the Jubilee FPSO to ensure that we can sustain the good operating performance and deliver further operating cost improvements. Our drilling programme has been very efficient and at current performance levels we will be able to deliver our planned programme of wells through next year with just one rig.

      The Board of Tullow remains fully committed to the merger with Capricorn which continues to be recommended by both the Tullow and Capricorn Boards on the current terms. We firmly believe that the proposed merger has the potential for material value creation by implementing a combined business plan which accelerates investment in key projects and delivers very significant synergies.

      We have a high quality, opportunity rich portfolio, a clear and disciplined growth strategy and an improving balance sheet. The Board looks to the future with confidence, and I look forward to sharing further details at a capital markets day.”

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