13 November 2019 10:42
Tullow Oil plc (LON: TWL) has issued the following Trading Update for the period 24th July to 13th November 2019. The Group will publish a Trading Statement and Operational Update on the 15th January 2020 and Full Year Results for 2019 will be announced on the 12th February 2020. PAUL MCDADE, CHIEF EXECUTIVE OFFICER, TULLOW OIL PLC, COMMENTED TODAY: "Tullow expects to deliver robust free cash flow for the full year. Since the Group's last update, Tullow announced two oil discoveries in Guyana at Jethro and Joe, and recent analysis has shown that at these locations we have encountered heavy oil. The first ever cargo of East African oil from Mombasa in August was an important milestone for Project Oil Kenya and we continue to make good progress with FID targeted in the second half of 2020.
However, Ghana production has not met our expectations this year and we are working closely with our Joint Venture Partners to ensure that both fields perform to their potential." · Full year 2019 West Africa net oil production from Ghana and non-operated portfolio forecast to average c.87,000 bopd · Uganda farm-down lapsed; Tullow and Joint Venture Partners remain committed to the Lake Albert Development Full year 2019 Group oil production, including production-equivalent insurance payments, is forecast to average around 87,000 bopd. Tullow continues to carry out its infill drilling programme across the Jubilee and TEN fields using the Maersk Venturer rig. Tullow expects to continue to use the Maersk Venturer rig across both the TEN and Jubilee fields in 2020. The well programme is being developed with the Joint Venture Partners and will be finalised by the end of the year. At Jubilee, gross full year 2019 production is forecast to be around 89,000 bopd (c.31,500 bopd net).
The Joint Venture Partners and the Government of Kenya are set to commence discussions with prospective lenders for the project financing of the export pipeline that will run from Turkana to the new Lamu Port at Manda Bay. The FID for Project Oil Kenya continues to be targeted in the second half of 2020. Tullow retains a 33.33% stake in the Lake Albert project which has over 1.7 billion barrels of discovered recoverable resources and is expected to produce over 230,000 bopd at peak production. Tullow remains committed to reducing its equity stake in the project ahead of FID and when appropriate will initiate a new sales process to achieve this. Tullow announced two oil discoveries in Guyana at the Jethro-1 well and the Joe-1 well in the Tullow-operated Orinduik licence in August and September respectively. Following the completion of well operations, oil samples were sent for laboratory analysis and results indicate that the oils recovered from both Jethro-1 and Joe-1 are heavy crudes, with high sulphur content.
Tullow and the Joint Venture Partners are assessing the commercial viability of these discoveries considering the quality of the oil, alongside the high-quality reservoir sands and strong overpressure. The discoveries have proven two different oil plays in this highly prolific basin, and Tullow remains confident of the potential across the multiple prospects in both the Cretaceous and Tertiary throughout the large Orinduik and Kanuku blocks. While the results from the Jethro and Joe wells in the far north of our acreage continue to be evaluated, the petroleum system models are being updated in pursuit of additional prospects and lighter oil in the area and, together with the Carapa well result, these will inform the 2020 drilling campaign. Preparations continue for the non-operated Marina-1 well to be drilled in Block Z-38 in Peru in the first quarter of 2020. In Côte d'Ivoire, Tullow plans to commence a 2D seismic survey across its substantial onshore acreage position around the end of the year, following a programme of local stakeholder engagement and regulatory approvals. Free cash flow generation has been adversely affected by lower production, and by lower oil prices for much of the second half of the year. Despite lower than forecast free cash flow, the Group continues to focus on debt reduction, and net debt at the end of 2019 is expected to be around $2.8 billion (from $3.1 billion at the beginning of the year). Capital expenditure for the year is expected to be approximately $540 million, including approximately $35 million for Tullow's 33.3% share of the Lake Albert Development in Uganda. Shares in Tullow Oil fell more than twenty per cent this morning as the London-listed firm reduced its production guidance for 2019 after problems with its Ghana drilling operations. The Africa-focused firm said that total oil production for 2019 would now be 87,000 barrels per day, down from an earlier forecast of 89,000. Tullow Oil said that it is focused on reducing net debt, with expectations of debt of $2.8bn at the end of 2019, down from $3.1bn at the beginning. In July, Tullow reported that its production well at TEN in Ghana had been suspended, which then also postponed the completion of the site's water injector well. In August shares in Tullow shot up after the company reported a significant discovery off the coast of Guyana in South America. "At the same time problems in the massive West African fields has seen production slip up – and combined with lower oil prices that means free cash flow isn't going to meet management's expectations. "Tullow expects to deliver robust free cash flow for the full year. "However, Ghana production has not met our expectations this year and we are working closely with our joint venture partners to ensure that both fields perform to their potential." (Reuters) - Africa-focussed Tullow Oil on Wednesday cut its 2019 oil production and free cash flow forecast for the year because of ongoing problems at its Ghana fields, sending its shares 14% lower. Tullow has been struggling with its operations in Ghana due to mechanical issues at its Jubilee field and a delay in completing a well at TEN offshore field. The company had cut its overall production twice already this year and in July said it expected output guidance to be 90,000-94,000 barrels of oil equivalent per day. With global oil prices stuck around $60 a barrel and production taking a hit, Tullow expects free cash flow in 2019 to be around $350 million, down from an earlier forecast of $400 million. The constrained water injection issue at Jubilee will return to full capacity by the end of this month, but enhancements to the gas handling system are planned for early 2020, Tullow said.