2021 FIRST HALF RESULTS SUMMARY

• Group working interest production for the first half of 2021 averaged 61,230 boepd, in line with expectations.
• Good operational progress in Ghana; FPSOs delivering over 98% uptime; sustained increased water injection and gas offtake rates; first new well in drilling programme, J56 producer, came on stream delivering production rates ahead of expectations.
• Progress made on the delivery of Business Plan set out in November 2020, including target to become Net Zero by 2030.
• Revenue of $727 million; gross profit of $321 million; profit after tax of $93 million; underlying operating cash flow of $218 million and free cash flow of $86 million. 
• Continued focus on costs results in reduced administrative expenses of $23 million in 1H21, down c.50% year-on-year.  
• Capital investment of $101 million; decommissioning costs of $37 million. 1H21 operating costs averaged $12.9/bbl, a year-on-year increase primarily due to lower production and increased costs related to extended COVID-19 operating procedures.
• Net debt at 30 June 2021 of c.$2.3 billion; Gearing of 2.6x net debt/EBITDAX; liquidity headroom and free cash of $0.7 billion.
• Completion of comprehensive debt refinancing with $1.8 billion of five-year Senior Secured Notes issued and a new $500 million revolving credit facility.
• Completion of Equatorial Guinea and Dussafu Marin permit sales in March and June respectively, receiving $133 million.

Rahul Dhir, Chief Executive Officer, Tullow Oil plc, commented today:
“Strong operational performance in the first half of the year and a transformational debt refinancing have put Tullow on a firm footing to deliver our Business Plan. Our West Africa production assets have performed well, and we are narrowing production guidance for 2021 to the upper end of the range. In Kenya, the revised development plan creates a robust project that has the potential to deliver material value to the Government of Kenya and other stakeholders. Through our operations, Tullow continues to deliver Shared Prosperity and to be an engine for economic and social change in the developing economies in which we work. Furthermore, by targeting Net Zero by 2030 and an emphasis on responsible operations, we are ensuring that the oil and gas resources of our host countries are developed efficiently and safely, whilst minimising our environmental impact.”

2021 GUIDANCE

• Group working interest production narrowed upwards to 58,000-61,000 boepd following deferral of a Jubilee shut-down into 2022 and an increase in production from Simba in Gabon following acceleration of work into 2H21.
• Full year capital investment and decommissioning spend of c.$260 million and c.$90 million respectively.
• Full year underlying operating cashflow expected to be c.$0.6 billion assuming $60/bbl for the remainder of the year. Post all costs, Tullow forecasts full year free cash flow of c.$0.1 billion. If the oil price averages $70/bbl in 2H21, this would increase by c.$50 million.
• Tullow’s free cash flow guidance includes an expected payment of $75 million from Total which would be triggered if a Final Investment Decision (FID) for the Lake Albert Development in Uganda occurs before the end of the year. Public announcements suggest good progress is being made in Uganda, with agreements recently in place to launch the Upstream and Pipeline projects, but if FID does not occur in 2021, the $75 million payment is expected in 2022. 

STRATEGY & BUSINESS PLAN

2021 is a transition year for Tullow as the Group begins to deliver the 10-year Business Plan presented at its Capital Markets Day last November. Much has been achieved in the first half of the year and while the start of drilling in Ghana is one of the most tangible examples, the Group has also maintained cost discipline, allocated capital carefully to accelerate high-return projects such as Simba in Gabon and recently submitted a revised draft development plan for Kenya, the culmination of over a year’s in-depth work. The issuance of $1.8 billion of Senior Secured Notes with a $500 million revolving credit facility in May 2021 placed Tullow on a much firmer financial footing and the Group now has a clear runway to invest appropriately in its assets to maximise their value and deliver its cash generative plan.

Over the past few months, Tullow has focused on further refining the plan for the 2021-2025 period with a base case capital expenditure of c.$1.3 to c.$1.5 billion during this period. This expenditure is self-funded and requires no additional borrowing. Revenues are protected by Tullow’s comprehensive prudent hedging programme and the Group has flexibility to reduce expenditure in the event of a sustained oil price fall to $55/bbl or below.

Overall, from 2021-2025, Tullow’s Business Plan will deliver growth in production, reserves and underlying value, along with material cash flow to support deleveraging which will see the Group reduce its gearing to below 1.5x by 2025. 

See full half year results