Tullow Oil issues Trading Statement & Operational Update

Tullow Oil plc (Tullow) issues this update and guidance in advance of the Group’s 2021 Full Year Results scheduled for 9 March 2022. The information contained herein has not been audited and may be subject to further review and amendment.


·    Group working interest oil production averaged 59.2 kboepd, in line with guidance, with notable production growth from the Jubilee field in Ghana and Simba field in Gabon but lower production than expected from TEN and Espoir.

·    In Ghana, ongoing improvements in operating performance resulted in uptime of >97% on both operated FPSOs and an increase in water injection rates and gas processing capacity.

·    Drilling in Ghana restarted in April with four new wells and a workover successfully completed, ahead of plan.

·    Revenue is expected to be c.$1.3 billion with a realised oil price of $63/bbl, including hedge costs of c.$150 million.

·    Capital and decommissioning expenditure were c.$265 million and c.$70 million respectively.

·    Underlying operating cash flow1 is expected to be c.$700 million and free cash flow is expected to be c.$250 million, ahead of guidance, driven by continued focus on costs, supportive oil prices in the latter parts of 2021 and favourable working capital movements.

·    Year-end net debt reduced to c.$2.1 billion (2020: $2.4 billion), with liquidity headroom of c.$0.9 billion at the start of 2022.


·    Group working interest oil production guidance is 55 to 61 kboepd. This forecast is based on Tullow’s existing equity interests in TEN (47.125%) and Jubilee (35.48%) and will be adjusted following completion of the pre-emption of the sale of Occidental Petroleum’s interest in Ghana to Kosmos Energy. The estimated full year impact of the completed pre-emption would be an addition of c.5 kboepd (net) to the Group’s 2022 production forecast, adjusted for completion timing.

·    Tullow is prioritising investment in high return opportunities in its producing assets, whilst ensuring the business remains self-funded at c.$65/bbl2 this year. Capital expenditure is forecast to be c.$350 million, split c.$270 million in Ghana, c.$30 million on the non-operated portfolio, c.$5 million in Kenya and c.$45 million on exploration and appraisal. Decommissioning expenditure is expected to be c.$100 million.

·    Increased year-on-year spend in Ghana is primarily due to investment in infrastructure for the Jubilee North East and South East areas that will lead to meaningful growth in production as these undeveloped parts of Jubilee are brought on stream from 2023 onwards.

·    At $75/bbl, underlying operating cash flow1 is expected to be c.$750 million with free cash flow2 of c.$100 million.

·    Debt reduction remains a key priority and the Group remains on track to materially reduce net debt and achieve gearing of less than 1.5x net debt to EBITDAX by 2025.

·    A material hedge portfolio protects c.75% of forecast sales volumes to May 2023 and 50% from May 2023 to May 2024.



Jubilee – 2021 performance

·    Oil production from Jubilee averaged 74.9 kbopd (net 26.6 kbopd), ahead of guidance set at the start of the year.

·    Average daily production grew from c.70 kbopd at the beginning of 2021 to exceed 90 kbopd by the end of the year, achieved through a combination of new wells brought on stream and improved operational performance.

·    The drilling programme delivered two producers (J56-P online in July, J57-P online in December), one water injector (J55-WI online in September) and a work over (J12-WI online early in January 2022).

·    Strong drilling performance over the period achieved both cost and efficiency improvements compared to previous drilling campaigns.

·    FPSO uptime averaged c.98%; gas offtake rates averaged >100 mmscfpd; and water injection rates averaged >200 kbwpd.

Jubilee – 2022 outlook

·    Jubilee production is expected to average between 80 to 84 kbopd (net: 28 to 30 kbopd). This includes the impact of a planned maintenance shutdown of approximately two weeks, scheduled to take place in the second quarter.

·    Three new wells are planned to be drilled at Jubilee in 2022. A water injector is due onstream in the first quarter, which will provide pressure support to existing producers. This will be followed by a producer and a second water injector.

·    The work programme is focused on delivering reliable in-year production through continued infill drilling as well as investment in projects that will access undeveloped resources and lead to meaningful production growth in subsequent years.

·    This investment will focus on new infrastructure to support the development of over 170 mmbbls gross estimated ultimate recovery (EUR) in previously undeveloped areas in the eastern parts of the field.

·    As part of a longer-term operational transformation plan, Tullow, supported by its Joint Venture (JV) Partners, has taken the decision to self-operate the Jubilee FPSO and will take over all operations and maintenance (O&M) from MODEC when the current O&M contract comes to a scheduled end in 2022. This presents an opportunity to realise further efficiency improvements whilst sustaining top quartile production operating performance in terms of safety, emissions, reliability, costs and local content.

·    As part of Tullow’s commitment to becoming a Net Zero Company by 2030 on its Scope 1 and 2 emissions, the scheduled shutdown on the Jubilee FPSO will help facilitate increased gas handling capacity. Planned facility modifications will support increased gas export capability and help towards the target of eliminating routine flaring in Ghana by 2025. Other activities planned during the shutdown will focus on maintenance, integrity and reliability of the FPSO for the long-term.

TEN – 2021 performance

·    Oil production from TEN in 2021 averaged 32.8 kbopd (net 15.5 kbopd), below guidance at the start of the year. This was primarily due to higher production decline rates than expected at some wells.

·    A gas injector at the Ntomme field, (Nt06-GI), was brought on stream in the fourth quarter to provide pressure support to existing production wells. Nt06-GI also encountered oil at the base of the well, de-risking the development potential of areas further to the north of Ntomme.

·    In 2021, uptime on the TEN FPSO was c.97%, water injection was c.90 kbwpd and gas injection was c.100 mmscfpd.

TEN – 2022 outlook

·    TEN oil production is expected to average between 22 to 26 kbopd (net 11 to 12 kbopd), driven by natural decline in the existing wells.

·    The JV Partners have identified material potential across TEN and a coordinated effort to improve field performance is under way with plans to accelerate production from undeveloped resources in the Greater Ntomme and Tweneboa (GNT) areas.

·    Drilling in 2022 will focus on further defining future development plans to maximise production and the fields’ value potential. Two strategic development wells are to be drilled in the Ntomme riser base area and an additional well is planned in the Enyenra area in the second half of the year. The JV is also investing in the infrastructure required to allow these wells to be brought on stream from 2023.

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