Tullow Oil downgrades output guidance again as it restores dividend

Irish-founded explorer Tullow Oil has recorded a drop in revenues in the first half of the year, as it announced another projected fall in production this year due to delays in well completions at its Tweneboa, Enyenra and Ntomme (Ten) project in Ghana.

The London-listed, African-focused company announced revenues of $872 million (€782 million) for the first six months as against $905 million a year earlier.

The revenue decline comes as the company revised its oil production forecast down to 89-93,000 barrels of oil per day (bopd) due to mechanical issues experienced completing the Enyenra-14 production well. This compares to a previous guidance of 90,000-98,000 bopd in April, which itself was a downgrade from an earlier forecast of between 93,000 and 101,000 bopd for2019.

The company confirmed the absence of Enyenra-14 and the consequent adjustment to production will have a $50 million impact on free cash for the year.

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Chief executive Paul McDade expressed disappointment over the technical difficulties .

“Overall, in Ghana we’re positive. We’ve had a good campaign on the rigs but these last couple of wells have been quite complex and we’re a little disappointed that we haven’t been able to deliver as expected,” he said.

Uganda

He also expressed frustration over the difficulties Tullow has experienced in Uganda, where a dispute with authorities has stalled a planned $900 million sale of a stake in a project to Total and Cnooc of China.

“We’ve been trying to close the deal for 2½ years now and we continue to work with the government . . . there is a desire by everyone to get the deal closed and move it forward but the challenge is turning that desire into the actual closure but we are continuing to try and push it to get it across the line,” Mr McDade said.

Tullow reported a rise in gross profits to $527 million for its first half compared to $521 million for the same period last year. Pre-tax profits rose to $268 million from $150 million.

The company confirmed an interim dividend of 2.35 cents per share, representing a total payout of $33 million. Tullow suspended dividends in 2015 due to the oil price crash.

“The first half financials are in good shape. We have another year of strong free cash flow with debt down at mid-year and gearing at 1.8x so the balance sheet is moving in the right direction,” said Mr McDade.

Tullow said first half capital expenditure totalled $238 million with the full-year forecast unchanged at $570 million.