Tullow Oil, the independent oil and gas exploration and production group, announces its Half Year Results for the six months ended 30 June 2024.

Rahul Dhir, Chief Executive Officer, Tullow Oil plc, commented today:
"During the first half of 2024, Tullow has continued to deliver strong operational and financial performance. We are pleased to report improved results across key financial metrics compared to the first half of 2023; with higher production and oil price realisations combined with lower expenditure. The Ghana drilling programme was also completed safely, and ahead of schedule.

"We were delighted to reach a major milestone by taking final investment decision (FID) of our nature-based carbon offset initiative, in partnership with the Ghana Forestry Commission. The project will deliver certified carbon offsets in line with Tullow’s 2030 Net Zero target, while bringing broader positive impacts to the local community.

"We now progress into a period of lower capex in the second half of the year and beyond. We will continue to reduce debt through sustainable free cash flow generation, strengthening our balance sheet and providing optionality for investment, growth and future returns."

2024 First Half Results

• First half Group working interest oil and gas production 63.7 kboepd (1H23: 60.8 kboepd).
• Revenue of $759 million (1H23: $777 million); realised oil price of $77.7/bbl after hedging (1H23: $73.3/bbl), gross profit of $460 million (1H23: $351 million); profit after tax of $196 million (1H23: $70 million).
• Capital expenditure of $157 million (1H23: $187 million) and decommissioning spend of $9 million (1H23: $44 million).
• Free cash flow1 of $(126) million (1H23: $(142) million), in line with expectations based on timing of tax payments and capital expenditure weighted toward the first half of the year.
• Net debt at 30 June 2024 of $1.7 billion (30 June 2023: $1.9 billion); cash gearing of 1.4x net debt/EBITDAX1 (30 June 2023: 1.7x); liquidity headroom of $0.7 billion (30 June 2023: $0.7 billion).

2024 Full Year Outlook

• 2024 Group working interest production is expected to be at the lower end of the Group’s 62-68 kboepd range, as previously guided; driven primarily by underperformance of a single Jubilee well, which came onstream in February 2024.
• Full year capex and decommissioning guidance of c.$230 million and c.$70 million, respectively. This represents a c.$20 million capex decrease (versus previous guidance of c.$250 million) in both Ghana and Gabon.
• A significant free cash flow uplift is expected in the second half of 2024. Full year free cash flow guidance remains unchanged at $200-300 million at $80/bbl.
• Increased access to oil price upside as legacy hedges fully rolled off in May 2024; 2H 2024 average floor of $60/bbl and capped upside of $112/bbl.
• Year-end net debt guidance is unchanged at less than $1.4 billion with gearing of c.1x (net debt/EBITDAX).
• Tullow has no uncovered debt maturities until May 2026 and continues to consider options to manage its debt maturities and optimise its capital structure.
• Outcome of arbitration in respect of Ghana Branch Profits Remittance Tax expected in the second half of 2024.
• Tullow remains focused on deleveraging and reaching net debt of less than $1 billion and cash gearing of less than 1x in the near term.

Production

In the first six months of 2024, Group production averaged 63.7 kboepd, including 7.0 kboepd of gas. As previously disclosed, Group
2024 production is expected to be at lower end of the 62 to 68 kboepd range.

Ghana 

During the first six months of the year, operational efficiency remained high, with average facility uptime across the Ghana FPSOs at 97%. 

Gross oil production from the Jubilee field averaged 90.1 kbopd (net: 35.1 kbopd) in the first half of the year. This was below expectations, primarily attributable to poor performance from to the J69 producer well, which was brought onstream in February 2024. The J69 well is producing significantly less than expected due to a lack of pressure communication from water injection in this specific area. This is not being experienced elsewhere and across the field, water injection has averaged a record c.225 kbwpd. This improved rate of water injection, together with the new J70 water injection well brought onstream in June, is resulting in a good uplift in reservoir pressure which is already increasing production levels and offsetting decline. As a result, Jubilee oil production is expected to remain at similar levels to the first half and average c.90 kbopd (net: c.34 kbopd) for the full year. 

Five new Jubilee wells (three producers and two water injectors) were brought onstream during the first half of 2024, bringing the current drilling programme to an end, approximately six months ahead of schedule and with no recordable safety incidents. A 4D seismic survey will be completed in early 2025 to update the view of the sub-surface, support drill candidate selection and optimise well placement ahead of a 2025/26 drilling programme. 

During the drill break, work will focus on integrating the results of the previous drilling programme and optimising pressure support across the field to maximise production and minimise decline. Tullow will continue to prioritise safe and reliable operations, with a focus on cost and capital efficiency to optimise cash flow delivery. 

Gross oil production from the TEN fields averaged 19.0 kbopd (net: 10.4 kbopd) in the first half of the year. The fields have exceeded expectations, with Enyenra and Ntomme wells responding positively to both injection and production optimisation. Consequently, full year gross TEN oil production guidance has been increased to c.18 kbopd (net: c.10 kbopd). 

Net gas production in Ghana averaged 6.5 kboepd in the first half of the year. The interim Gas Sales Agreement remains in place until the fourth quarter of 2025 at $3.00/mmbtu with applicable indexation. Tullow is also in discussion in relation to potential third party off-take opportunities to create a significant longer-term revenue stream from gas production.

Non-operated and exploration portfolios 

Production from our non-operated portfolio in Gabon and Côte d’Ivoire averaged 11.7 kboepd net in the first half of the year, in line with expectations. Full year net production remains unchanged at c.11.5 kboepd. 

Tullow was deeply saddened to learn of the incident at the Perenco-operated Simba field in Gabon in March 2024, which resulted in fatalities. Production has been shut in while investigations and remediations are taking place. Production is expected to resume on the Simba field before the end of the year. Production forecasts for Gabon remain unchanged with lower Simba production being offset by improvement in other fields, including Ezanga and Echira. 

In Côte d’Ivoire, Tullow continues to work with the operator of the Espoir field to establish the best way forward for the asset. Tullow continues to mature prospects on its exploration licences in Côte d’Ivoire and Argentina alongside seeking potential farm-down Partners.

Kenya 

Tullow continues to work collaboratively with the Government of Kenya as they evaluate the amended Field Development Plan (FDP). The Energy and Petroleum Regulatory Authority (EPRA) has provided useful feedback and the FDP review period has been extended for a further six months to 31 December 2024. Tullow is continuing its cooperation and collaboration with the Government to reach final approval of the FDP. Discussions continue with prospective strategic partners for this project.

KeyFacts Energy: Tullow Ghana country profile