Tullow Oil today reported financial and operating results for the year ending 31st December 2021.

Rahul Dhir, Chief Executive Officer, Tullow Oil plc, commented:
"Following a transformational 2021, in which Tullow successfully refinanced its balance sheet, drilled highly productive wells in Ghana and demonstrated operational excellence and financial discipline across the Group, we are now concentrating on the successful delivery of our long-term business plan. This year will see a great deal of activity at our flagship Jubilee field with investment in new infrastructure and new wells to grow production in the near term and we are taking on the operation and maintenance of the FPSO. At TEN, we will drill two important, strategic wells that will help define our future plans for the fields and we will continue to build production in Gabon. I also expect us to make tangible progress towards our ambitious target of achieving Net Zero by 2030. With additional opportunities to deliver value across our portfolio, including gas commercialisation in Ghana, our revised Kenya development project and an exciting well in a proven play in Guyana, we are well-placed to deliver value from our assets and to grow our business."

2021 FULL YEAR RESULTS SUMMARY

• Revenue of $1,273 million; gross profit of $634 million; loss after tax of $81 million primarily driven by exploration costs written off, impairments, restructuring costs and other provisions.
• Underlying operating cash flow1 of $711 million and free cash flow1 of $245 million.
• Capital and decommissioning expenditure of $263 million1 and $69 million respectively.
• Net debt at year-end of $2.1 billion; gearing of 2.2x1 net debt/EBITDAX; liquidity headroom of $0.9 billion.
• Group working interest production averaged 59.2 kboepd, in line with guidance with notable production growth from Jubilee in Ghana and Simba in Gabon, but lower production than expected from TEN and Espoir.
• In Ghana, strong performance delivered across key operational areas of FPSO uptime, water injection and gas processing. Drilling recommenced in April, with four wells and a workover successfully completed, ahead of plan.
• Commitment made to becoming Net Zero on Scope 1 and 2 emissions by 2030 and to eliminate routine flaring in Ghana by 2025.
• Received $133 million from divestment of non-core interests in Equatorial Guinea and the Dussafu Marin Permit in Gabon.
• Comprehensive debt refinancing completed in May, with new $1.8 billion five-year Senior Secured Notes; a new undrawn $500 million revolving credit facility provides strong liquidity headroom.
• Continued focus on costs helped achieve c.25% year-on-year reduction in administrative expenses to $64 million; operating costs reduced to $269 million (2020: $332 million), driven by lower facilities operations and maintenance costs in Ghana, as well as asset disposals.
• Phuthuma Nhleko appointed Chair of Tullow, succeeding Dorothy Thompson who stepped down on 31 December 2021.

2022 OUTLOOK

• Group working interest oil production guidance remains 55 to 61 kboepd based on Tullow’s existing equity interests in TEN and Jubilee. This forecast will be adjusted following completion of the pre-emption of the sale of Occidental Petroleum’s interest in Ghana to Kosmos Energy. The estimated full year impact of the completed pre-emption would be an addition of c.5 kboepd (net) to the Group’s 2022 production forecast, adjusted for completion timing. 
• Full year underlying operating cash flow1 guidance remains c.$750 million, assuming $75/bbl for the remainder of the year.
• Full year free cash flow guidance remains c.$100 million assuming $75/bbl for the remainder of the year; year-to-date cash flow positively impacted by oil prices at the start of the year, largely offsetting the one-off impact of a $76 million payment to HiTec Vision in relation to the purchase of Spring Energy in 2013, following an arbitral decision in HiTec Vision’s favour. Material cash flow contribution secured in February with receipt of $75 million contingent consideration following Final Investment Decision (FID) in Uganda.
• Capex of c.$350 million, split c.$270 million in Ghana, c.$30 million for non-operated portfolio, c.$5 million in Kenya, and exploration spend of c.$45 million. Decommissioning spend is expected to be c.$100 million.
• Three new wells at Jubilee and three new wells at the TEN fields planned, including two strategic wells at TEN to further define future development plans, as well as investment in infrastructure for the undeveloped Jubilee South East and North East areas.
• Tullow will self-operate the Jubilee FPSO from mid-2022 onwards, following the scheduled end of the contract with MODEC, enabling the Group to realise further efficiency improvements and cost savings.
• Tullow expects to secure a gas commercialisation agreement in Ghana which will come into effect once all foundation gas volumes have been delivered; this is forecast to occur before year-end.
• In Kenya, a revised Field Development Plan was submitted in late 2021 and discussions are progressing with potential strategic partners.
• In mid-2022 Tullow will participate in the Repsol operated Beebei-Potaro well, which is a follow-up to the Carapa light oil discovery made in 2020 in the Kanuku licence, offshore Guyana.
• Work plan in place to progress towards Net Zero target, focusing on gas compression facilities on the Jubilee FPSO; MOU signed with the Ghana Forestry Commission to identify and develop nature-based carbon offset projects in Ghana to offset hard to abate and residual emissions.

Production, Reserves and Resources

In 2021, Group working interest production averaged 59.2 kboepd, in line with guidance, with notable production growth from the Jubilee field in Ghana and Simba field in Gabon, but lower production than expected from the TEN fields in Ghana and the Espoir field in Côte d’Ivoire.

In 2022, Group working interest production guidance is 55 to 61 kboepd. This forecast is based on Tullow’s existing equity interests in Jubilee (35.48%) and TEN (47.175%) and will be adjusted following completion of the pre-emption of the sale of Occidental Petroleum’s interest in Ghana to Kosmos Energy. The estimated full year impact of the completed pre-emption would be an addition of c.5 kboepd (net) to the Group’s 2022 production forecast, subject to adjustment for completion timing.

The Group’s audited 2P reserves decreased from 260 mmboe at the end of 2020 to 231 mmboe at the end of 2021. About half of this reduction was the result of the sale of assets in Equatorial Guinea and the Dussafu Marin Permit in Gabon (15 mmboe). Reserve additions and positive revisions included a 13 mmboe increase at Jubilee following improved field performance and acceleration of new projects and a 11 mmboe increase in the non-operated portfolio due to better field performance and maturation of new projects. These gains were offset by a 16 mmboe decrease at TEN reflecting poorer than expected Ntomme field performance and re-categorisation of certain reserves at Enyenra. Overall, with the Group producing 22 mmboe during 2021, the organic reserves replacement ratio was approximately 36%.

The Group’s audited 2C resources decreased from 640 mmboe to 623 mmboe. The reduction was driven primarily by the sale of assets in Equatorial Guinea and Gabon, the maturation of selected TEN projects from 2C to 2P and poorer than expected field performance at TEN. However, these reductions were largely offset by a positive revision from Tullow’s auditors of the Kenyan assets, to align with the updated Field Development Plan.

Ghana

Jubilee
The Jubilee field averaged 74.9 kbopd gross (net 26.6 kbopd) in 2021, ahead of guidance at the start of the year. Average daily production grew from c.70 kbopd at the beginning of the year to exceed 90 kbopd by year-end, as new wells were brought onstream and operational performance remained high with FPSO uptime averaging c.98%, gas offtake rates averaging c.85 mmscfd and water injection rates averaging over 200 kbwpd. 

TEN
The TEN fields averaged 32.8 kbopd gross (net: 15.5 kbopd) in 2021, below guidance given at the start of the year. This was primarily due to higher production decline rates than expected on particular wells. A gas injector at the Ntomme field (Nt06-GI), was brought onstream in the fourth quarter to provide pressure support to existing production wells. Nt06-GI also encountered oil at the base of the well, derisking the development potential of areas further to the north of Ntomme. In 2021, uptime on the TEN FPSO was c.97%, water injection was c.65 kbwpd and gas injection was c.135 mmscfd.

KeyFacts Energy: Tullow Ghana country profile