Tullow eyes $600m cashflow as it makes operational, financial progress

Exploration company Tullow Oil said it expects a full-year operating cashflow to remain steady from last year at $600 million, provided oil prices average at $60 per barrel for the rest of the year.

In a trading statement, the company said an increase in that average of $10 would add another $50 million to its operating cashflow.

Tullow, which refinanced it $2.3 billion debt pile this year to extend maturities, expects to invest $250 million, mainly on drilling in Ghana, and financing costs of $290 million.

The company, which has a market capitalisation of $1 billion, is guiding for output to stay steady at around 60,000 barrels per day. It has hedged most of its output for the rest of the year at an average price of $67 a barrel and about half of its output at $72 next year with smaller amounts hedged into 2024.

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Revenue for the first half of 2021 is expected to be around $700 million, on realised oil prices of $58 per barrel, including hedge costs of around $50 million.

Cashflow is expected to be $200 million. Net debt by the end of June is expected to be $2.3 billion, with capital expenditure for the first six months of the year at $100 million.

Chief executive Rahul Dhir said the company had made excellent operational and financial progress in the first half of 2021.

“Our producing fields in West Africa are performing well and we have successfully started our drilling programme in Ghana. This strong operational performance, combined with continued capital discipline, improved market conditions and asset sales in Gabon and Equatorial Guinea, supported our transformational debt refinancing,” he said. “Tullow now has a strong financial footing and we are making very good progress in delivering on our highly cash generative business plan and continuing to reduce our debt.” – Additional reporting: Reuters