Tullow Oil PLC Trading Statement and Operational Update (9792M)
January 27 2021 - 2:00AM
UK Regulatory
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RNS Number : 9792M
Tullow Oil PLC
27 January 2021
TULLOW OIL PLC
Trading Statement and Operational Update
27 JANUARY 2021 - Tullow Oil plc (Tullow) issues this update and
guidance in advance of the Group's 2020 Full Year Results. 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:
"Despite the challenges that 2020 presented, Tullow delivered
production in line with expectations, executed major reductions to
its cost-base and reduced net debt through the Uganda asset sale.
Tullow has a busy year ahead as we begin implementing the business
plan that we laid out at our Capital Markets Day. The plan is
focused on ensuring that Tullow's producing assets in West Africa
reach their full potential. We will leverage the new plan and our
reduced cost base to generate positive free cash flow at current
commodity prices, drive down our net debt and deliver a robust
balance sheet."
FINANCIAL AND Operational Update
2020 Performance
-- The impact of COVID-19 has been managed effectively across the Group with negligible impact on production.
-- Group working interest oil production averaged 74,900 bopd in 2020, in line with guidance.
-- 2020 full year revenue is expected to be c.$1.4 billion with a realised oil price of $50.8/bbl, including hedge
receipts of c.$0.2 billion; gross profit is expected to be c.$0.4 billion.
-- Capital and decommissioning expenditure for 2020 were c.$290 million and c.$50 million respectively.
-- Year-end net debt reduced to c.$2.4 billion (2019: $2.8 billion), as a result of $430 million free cashflow.
This includes Uganda proceeds of $500 million, c.$70 million of Group redundancy payments and
negative year-end working capital adjustments of c.$50 million.
-- Pre-tax impairments and exploration write-offs are expected to be broadly in line with the $1.4 billion reported
in 1H20 Results.
2021 Outlook
-- Group working interest oil production is forecast to average 60-66,000 bopd in 2021. This forecast reflects the
drilling hiatus in 2020, a planned shut-down in September on Jubilee and deferred development
drilling on Simba in Gabon.
-- Capital expenditure is forecast to be c.$265 million, with an additional c.$100 million to be spent on
decommissioning.
-- Organisational restructuring completed which is expected to deliver sustainable annual cash savings of over $125
million.
-- Underlying operating cash flow(1) is expected to be c.$0.5 billion at $50/bbl for the first year of Tullow's new
business plan which aims to deliver c.$7 billion underlying operating cash flow over the
next 10 years; 2021 pre-financing cash flow is expected to be c.$0.2 billion at $50/bbl(2) .
-- In Ghana, oil production from Jubilee and TEN for the year to date is in line with expectations, supported by
gas offtake from the Government of Ghana of c.125 mmscfd.
-- A new oil offloading system is being commissioned on Jubilee and is expected to be ready for a first lifting in
February.
-- A drilling rig is being mobilised to Ghana to commence operations in the second quarter of the year and the
first new production well on Jubilee is forecast to be onstream in the third quarter.
-- In the Non-operated portfolio, development drilling is restarting in Gabon and Equatorial Guinea, whilst
decommissioning activity continues in Mauritania and the United Kingdom.
-- In Kenya, following approval of the 2021 Work Programme and Budget, Tullow received an extension to its
exploration licences to the end of 2021. Tullow and its Joint Venture Partners are now re-working
the development project to ensure that it is robust at low oil prices and expect to submit a revised plan to the
Government of Kenya later this year.
-- In Côte d'Ivoire, Tullow has reduced its onshore exploration portfolio to focus on unlocking value from the
CI-520 block.
-- In the Suriname-Guyana basin, drilling of the Goliathberg-Voltzberg North exploration well in Block 47 in
Suriname is expected to commence shortly. Work also continues on developing the prospect inventory
on the Orinduik and Kanuku licences offshore Guyana.
(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
Refinancing Update
Following the Capital Markets Day, at which Tullow's senior
management presented a new business plan and operating strategy,
the Group has started discussions with its creditors with regards
to its debt refinancing options. As part of these discussions,
Tullow and its lending banks have agreed to extend the
redetermination of the Group's Reserve Base Lending facility, which
was due to complete in January, by up to one month. This will allow
for additional time to review the business plan and operating
strategy.
Production guidance
Group average working interest production FY 2020 actuals (kbopd) FY 2021 forecast (kbopd)
=========================================== ======================== =========================
Ghana 52.4 40.5
=========================================== ======================== =========================
Jubilee 29.5 24.3
=========================================== ======================== =========================
TEN 23.0 16.2
=========================================== ======================== =========================
Equatorial Guinea 4.8 4.8
=========================================== ======================== =========================
Gabon 15.5 15.4
=========================================== ======================== =========================
C ô te d'Ivoire 2.1 2.3
=========================================== ======================== =========================
Oil production 74.9 63.0
=========================================== ======================== =========================
CONTACTS
=========================================== ===================
Tullow Oil plc Murrays
(London) (Dublin)
(+44 20 3249 9000) (+353 1 498 0300)
George Cazenove (Media) Pat Walsh
Matthew Evans and Chris Perry (Investors) Joe Heron
=========================================== ===================
Notes to editors
Tullow is an independent oil & gas, exploration and
production group, quoted on the London, Irish and Ghanaian stock
exchanges (symbol: TLW). The Group has interests in over 70
exploration and production licences across 15 countries.
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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