Tullow Provides November Trading Update
Tullow Oil plc (Tullow) issues the following Trading Update for the period 27 July to 8 November 2017. The Group will publish a Trading Statement and Operational Update on 10 January 2018. Full Year Results for 2017 will be announced on 7 February 2018.
• Full year 2017 West Africa net oil production guidance, including production-equivalent insurance payments, revised upwards to 85-89,000 bopd (from 78-85,000 bopd), following strong production performance from both TEN and Jubilee.
• TEN FPSO commissioning completed; 2017 gross production now expected to exceed guidance of 50,000 bopd following higher rates in the second half of the year; final ITLOS tribunal decision results in no adverse impact to the TEN fields and allows development drilling to resume in early 2018.
• Greater Jubilee Full Field Development Plan approval received from the Government of Ghana – drilling to commence in 2018; Jubilee turret remediation work optimised and now planned for 2018 with seven-to-nine weeks of total shut-down.
• Uganda farm-down submitted to the Government for approval following signature of pre-emption documentation; deal completion expected in the first half of 2018. Working towards FID in the first half of 2018, with FEED and ESIAs for upstream and pipeline progressing in line with schedule.
• South Lokichar Exploration and Appraisal drilling campaign now concluded, results being evaluated and incorporated in the development plans. Early Oil Pilot Scheme (EOPS) is now expected to commence early in 2018.
• Araku-1 wildcat well drilled in Block 54 in Suriname; no significant reservoir quality rocks encountered, but presence of gas condensate de-risks deeper plays for future possible exploration.
• 2017 Capex guidance reduced to c.$0.3 billion; free cash flow of around $0.4 billion forecast for 2017; Net debt at 31 October 2017 reduced to $3.6 billion. The RBL re-financing is on schedule to complete before year-end.
“I am pleased to report that Tullow continues to make good operational and financial progress. The business is generating free cash flow which is enabling us to continue to reduce our debt. We have upgraded our oil production forecasts for West Africa following strong production at both Jubilee and TEN. In East Africa, both our projects are making steady progress towards Final Investment Decisions with our Kenyan business beginning the important shift from exploration and appraisal to development. With financial discipline and efficiency embedded across the Group, and with market conditions showing some early signs of improving, Tullow is well placed to benefit both from targeted investment in our diverse, low-cost portfolio and the opportunities that this point in the cycle presents.”
Tullow formally commenced the re-financing of its Reserves Based Lending facility in October and is on schedule to complete the process before the end of the year. At 31 October 2017, Tullow had net debt of $3.6 billion, down from $3.8 billion at the Half Year, and unutilised debt capacity and free cash of approximately $1.2 billion.
Forecast capital expenditure for the year has reduced to approximately $0.3 billion (net of accrual reversals) following a reduction of approximately $60 million made across the Group’s East African assets. This Group forecast includes expenditure of approximately $65 million in Uganda which will be reimbursed once the farm-down completes next year.
Strong production and higher oil prices for much of the second half of the year continues to positively impact cash flow generation, and for the Full Year 2017, the Group expects to generate around $0.4 billion of free cash flow.
Source / More: Tullow Oil
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