CEO of Tullow Oil Group, Rahul Dhir

Tullow Oil has reduced its debt to $2.1 billion in 2021, from $2.4 billion in 2020, its January 2022 Trading Statement and Operational Updated has disclosed.

According to the report, revenue is expected to hit $1.3 billion in 2021 with a realised oil price of $63 barrel, including a hedge cost $150 million.

Again, it said 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. However, production was lower than expected from TEN and Espoir

“In Ghana, ongoing improvements in operating performance resulted in uptime of  over 97% on both operated FPSOs and an increase in water injection rates and gas processing capacity”, the mining giant said.

Also, drilling in Ghana restarted in April 2021 with four new wells and a work over successfully completed, ahead of plan.

Group Chief Executive of Tullow Oil Plc, Rahul Dhir said “”2021 was a year of positive change and transformation for Tullow, and we ended the year on a firm financial and operational footing. The delivery of our long-term Business Plan is progressing well with significant improvements in safety, operating efficiency and drilling performance.”

“In 2022, we will build on these firm foundations and focus on investing in our producing assets in West Africa. Our plans in Ghana, where we are in the process of increasing our stakes in both the Jubilee and TEN fields, will position us to deliver the free cash flow to reduce gearing to less than 1.5x by 2025. Elsewhere, our Gabon near-field non-operated exploration opportunities, our revised Kenya development project and the Beebei-Potaro commitment well in Guyana also have the potential to be significant value drivers for Tullow. There is much to look forward to this year.”

2022 Outlook

Tullow said it is prioritising investment in high return opportunities in its producing assets, whilst ensuring the business remains self-funded at $65 per barrel this year.

It also pointed out that 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.

Ghana 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 also grew from 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.

On the outlook, Tullow said 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.