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RNS Number : 7072F
Tullow Oil PLC
12 July 2023
TULLOW OIL PLC
July Trading Statement & Operational Update
Jubilee South East due onstream imminently, driving a positive
step change in production and free cash flow generation
$266 million gross debt reduction in 1H through bond buy back
and amortisation
12 JULY 2023 - Tullow issues the following statement in advance
of the Group's 2023 Half Year Results scheduled for 13 September
2023. The information contained herein has not been audited and may
be subject to further review and amendment.
Rahul Dhir, Chief Executive Officer of Tullow, commented
today:
"This is an exciting time for Tullow and a pivotal moment in
2023 as we are on the cusp of the start-up of Jubilee South East, a
project that demonstrates our operational capability and continued
investment in Ghana's world class Jubilee field. Gross production
from the field is expected to exceed 100,000 bopd which will mark
the outset of increased cash flow generation to materially
deleverage our business.
"Our tender offer for the 2025 Notes marked an important step in
addressing our debt maturities and reiterates our confidence in our
business plan and outlook. It has also accelerated our deleveraging
trajectory and we expect to continue this positive momentum in the
second half of 2023 and beyond."
Operations update
-- First half 2023 Group production averaged c.53 kboepd. Net
production in the first half of the year from the Jubilee and TEN
fields averaged c.28 kbopd and c.11 kbopd, respectively, and net
production from Gabon and Côte d'Ivoire averaged c.14 kboepd . Full
year group guidance remains unchanged at 58-64 kboepd.
-- Jubilee South East (JSE) is due onstream imminently. Three
JSE producers and one JSE water injector are expected onstream this
year to help sustain gross Jubilee production over 100 kbopd.
Tullow and its Partners plan to maintain this increased level of
production at Jubilee over the next few years through an ongoing
infill drilling programme. Future drilling locations have been
identified to further extend this plateau and realise the full
potential of the significant Jubilee resource base.
-- Planned TEN shutdown is underway, seeking to improve gas
handling and support reduced flaring. The amended TEN Plan of
Development is being finalised following good engagement with the
Government of Ghana.
-- Production efficiency across the TEN and Jubilee FPSOs has
been high, averaging 97% uptime in the first half of 2023.
-- Commercial terms for the long-term gas sales agreement are
under discussion with the Government of Ghana. The agreement will
not only enhance energy security in Ghana but also add another
revenue stream for Tullow and result in the addition of c.150-200
bcf of net gas reserves on TEN.
-- Approval has been received from the Government of Gabon for
the cashless asset swap agreement announced in April. The asset
swap with Perenco optimises Tullow's equity ownership and places
the Tchatamba facilities as a core production hub for the
Group.
Financial update
-- Total revenue in the first half, including the cost of
hedging, of c.$0.8 billion at a realised average oil price of
c.$81/bbl before hedging and c.$74/bbl after hedging.
-- Capital expenditure of c.$200 million in the first half; full
year capital expenditure guidance remains c.$400 million.
-- Decommissioning expenditure of c.$40 million. Full year
guidance is reduced to c.$70 million due to deferrals into 2024. As
previously announced, a further c.$20 million will be paid into
escrow in 2023 for future decommissioning obligations in Ghana and
Gabon.
-- Free cash flow of negative c.$100 million in the first half,
in line with expectations. Significant reversal expected in the
second half of the year, with c.$200 million free cash flow
generated at $80/bbl. Full year free cash flow guidance remains
unchanged at c.$100 million at $80/bbl.
-- Purchase of c.$166 million of the 2025 Notes for c.$100
million cash consideration announced in June, delivering value
accretion of c.$86 million from a combination of a c.$66 million
net debt reduction and coupon savings to maturity of c.$20
million.
-- Gross debt reduced by c.$266 million in the first half of
2023 through a combination of the 2025 Notes purchase and annual
amortisation of the 2026 Notes. Net debt at the end of the first
half of 2023 was c.$1.9 billion and is forecast to be c.$1.7
billion at year-end.
-- Commodity hedging policy reinstated to ensure 60% downside
protection for the first year ahead, and 30% for the second year,
whilst maintaining full upside exposure for no less than 60%,
through appropriate instrument selection.
Oil hedge portfolio as of 30 June 2023 2023 2024
============================================ ======== ========
Hedged volume - protected downside (kbopd) 34.5 11.3
============================================ ======== ========
Hedged volume - capped upside (kbopd) 28.0 11.3
============================================ ======== ========
Weighted average floor protected $56/bbl $55/bbl
============================================ ======== ========
Weighted average sold call $75/bbl $75/bbl
============================================ ======== ========
Governance update
-- Rebecca Wiles was appointed as a non-executive director of
Tullow in June 2023. She brings deep technical and geoscience
expertise alongside emerging markets experience in Africa to the
Tullow Board. Following the departure of Mike Daly at the end of
the 2023 AGM, Rebecca replaces this critical skill set on the
Board.
-- Over one million shares purchased by Tullow Directors
demonstrates the Board's confidence in the Group's strategy. A
summary of the purchases is shown below.
Member Aggregated number of shares purchased in June 2023
=========================================== ===================================================
Phuthuma Nhleko, Chairman 142,500
=========================================== ===================================================
Rahul Dhir, Chief Executive Officer 360,900
=========================================== ===================================================
Richard Miller, Chief Financial Officer 35,500
=========================================== ===================================================
Roald Goethe, Non-Executive Director 750,000
=========================================== ===================================================
Genevieve Sangudi, Non-Executive Director 100,000
=========================================== ===================================================
Sheila Khama, Non-Executive Director 32,900
=========================================== ===================================================
C ontacts
Tullow Oil plc Camarco
(London) (London)
(+44 20 3249 9000) (+44 20 3781 9244)
Nicola Rogers Billy Clegg
Matthew Evans Georgia Edmonds
Rebecca Waterworth
==================== ====================
N otes to editors
Tullow is an independent oil & gas, exploration and
production group which is quoted on the London and Ghanaian stock
exchanges (symbol: TLW). The Group has interests in over 30
licences across eight countries. 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 .
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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