Tullow Oil’s turnaround gains momentum — Records impressive first half results
THE turnaround of Tullow Oil Plc is gaining momentum, with the oil producing company recording an impressive financial performance in the first six months of the year.
The company’s sales revenue increased from US$727 million in the first half of 2021 to US$846 million in the first half of 2022.
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This excludes the benefit of over US$200 million revenue relating to two of Ghana’s liftings, which took place in early June, but for which cash was received shortly after June 30, 2022, on July 1 and 5 respectively.
Its gross profit also almost doubled from US$321 million in the first half of 2021 to US$620 million in the same period of 2022.
This resulted in a profit after tax of US$261 million for the half year of 2022, more than the US$93 million recorded in the half year of 2021.
Commenting on the company’s performance in its half year report copied to the paper, the Chief Executive Officer (CEO) Rahul Dhir said the impressive performance came on the back of solid production from its West African portfolio.
He said the company added material unhedged production in Ghana through the pre-emption of the Kosmos-Oxy deal and took over the operations and maintenance of the Jubilee Floating production storage and offloading to ensure that it sustains the good operating performance and deliver further operating cost improvements.
“Our drilling programme has been very efficient, and at current performance levels, we will be able to deliver our planned programme of wells through next year, with just one rig,” he stated.
Production
The first half of the 2022 results released by the company indicated that the group working interest production averaged 60,900 barrels of oil per day (bopd) in the first half of 2022, in line with expectations.
In Ghana, the ongoing drilling programme that started in April 2021 has delivered eight new wells, six at Jubilee and two at TEN, at an average cost of US$50 million per well (more than 10% below the average expected cost for these wells) and ahead of schedule.
In addition, two existing wells have been completed, one at Jubilee (J12-WI) and one at Tweneboa Enyenra Ntomme (TEN En16-WI).
The first of the two strategic riser base wells (Nt10-P) was drilled to define the extent of the Ntomme reservoir and found good quality reservoir sands, but was water bearing.
The second well (Nt11-P) is planned to target a different objective later this year and will help define future drilling and infrastructure plans for the TEN Enhancement Project. The rig is currently drilling and completing a producer well on Enyenra (En21-P), before moving across to Nt11-P.
Gross production from the Jubilee field averaged c.82,400 bopd (net: c.30,800 bopd) in the first half of the year, representing an increase of more than 15 per cent compared to the first half of 2021.
Gross production from the TEN field averaged c.24,300 bopd (net: c.12,500 kbopd) in the first half of the year, in line with expectations.
Merger with Capricorn Energy
Tullow also noted that it would host a Capital Markets Day for investors and issue a circular and prospectus in connection with the recommended merger between the company and Capricorn Energy in the fourth quarter, ahead of a shareholder vote, followed by completion of the transaction before the end of the year.
Mr Dhir said the Board of Tullow remains fully committed to the merger, which continues to be recommended by both the Tullow and Capricorn Boards on the current terms.
“We firmly believe that the proposed merger has the potential for material value creation by implementing a combined business plan which accelerates investment in key projects and delivers very significant synergies.”
“We have a high quality, opportunity rich portfolio, a clear and disciplined growth strategy and an improving balance sheet. The Board looks to the future with confidence, and I look forward to sharing further details at a capital markets day,” he stated.
On June 1, 2022, Tullow announced that it had reached agreement with Capricorn Energy on the terms of an all-share merger to create a leading African energy company with a material and diversified asset base and a portfolio of investment opportunities delivering visible production growth.
This recommended merger will enable the new company to develop and implement a new business plan that accelerates the development of new material opportunities, realise meaningful cost synergies and deliver a combined group with robust cash generation and a resilient balance sheet.