Tullow Oil to Focus on Free Cash Flow in Reducing Debt


Tullow Oil

With 2016-end year post tax loss of 600 million USD, operating cash flow of 800 million USD, and revenue of 1.3 billion USD, Tullow oil has made notice that it will not be paying shareholder dividends.

For the 2016 operational year, Tullow Oil – a leading independent oil & gas, exploration and production group, quoted on the London, Irish and Ghanaian stock exchanges (symbol: TLW), reported a net debt of 4.8 billion USD with significant facility headroom and free cash of 1.0 billion USD. During the year, 300 million USD of convertible bonds were issued and Corporate Facility extended to April 2018.  Tullow also recorded a decrease in profits between 2015 and 2016. The reduction is estimated at about 8 per cent. Tullow Oil has also reduced its 2017 production forecast in Ghana from 73,700 barrels of oil per day to 68, 500 barrels of oil per day (bopd) as Ghana’s FPSO Kwame Nkrumah is scheduled to experience a 12 week closure for maintenance works within the year.

Aidan Heavey, Chief Executive of Tullow Oil commented on the company’s 2016 full year results. He said: “The clear highlight of 2016 was delivering Ghana’s second major oil and gas development, the TEN fields, on time and on budget. Production from TEN, alongside our other West African oil production, has provided Tullow with positive free cash flow and enabled us to begin the important process of deleveraging our balance sheet. As we focus our free cash flow primarily on reducing our debt, capital discipline remains critical. We have made excellent progress with our East African developments and are building a high quality exploration portfolio to grow our business. As I move to become Chairman of the Group and hand over to Paul McDade, Tullow has the right assets and expertise to take full advantage of the opportunities ahead.”

Summary of Tullow Oil’s 2016 full year results include:

2016 capex of $0.9 billion; 2017 capex forecast of $0.5 billion including $125 million to be offset by Uganda farm-down deal.

West Africa net working interest oil production, including production-equivalent insurance payments, averaged 65,500 bopd in 2016 and in 2017 is expected to average between 78,000 and 85,000 bopd.

TEN development delivered on time and on budget in August 2016; 2017 gross forecast of 50,000 bopd. Drilling is expected to resume in 2018 after the ITLOS ruling which is expected in late 2017.

Jubilee field 2017 net production forecast of 36,300 bopd, including insured barrels; Turret Remediation Project making good progress with costs being offset by insurance payments.

Uganda deal provides upfront cash and deferred payments to cover upstream and pipeline capex to first oil and beyond.

Kenya exploration and appraisal programmes continue to support resource growth; Erut-1 oil discovery de-risks additional prospects in the north of the South Lokichar Basin.

New Ventures activity delivers acreage in Zambia and Guyana; 2017 activity includes high impact Araku-1 well in Suriname and seismic campaigns in Mauritania, Kenya, Ghana, Jamaica, Uruguay and Guyana to identify future drilling candidates.


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