…as TEN, Jubilee half-year results remain in line with guidance

Production from Tullow Ghana’s Jubilee and Tweneboa Enyenra Ntomme oil fields for the first half of 2020 remains in line with full-year forecasts, despite disruptions caused by the Coronavirus pandemic and collapse in prices due to the Russia-Saudi Arabia oil price war.

Half-year production results from the oil producer show that gross Jubilee production averaged 84,700 bopd and net of 30,000 bopd, with gross TEN production averaging 50,900 bopd with a net of 24,000 bopd, while net production from the non-operated portfolio was 23,700 bopd, in line with full-year projections.

“Ghana’s operational performance has been strong in the first-half, with uptime on both FPSOs in excess of 95 percent,” it said in its half-year trading statement and operational update released yesterday.

While Tullow is not anticipating any disruption to its Ghana business, it said operations on the Ntomme-9 production well at TEN are ongoing, and that the well is due to go on-stream in August.

On the performance of the group’s businesses and impact of COVID-19, the statement said: “The impact of COVID-19 has been managed safely across our business, with no impact on our operated production. Group working interest production in the first half of 2020 averaged 77,700 bopd in line with expectations; full-year guidance has been narrowed to 71,000-78,000 bopd, reflecting continued good performance across the portfolio”.

Notwithstanding, in Kenya, it said impacts of COVID-19 on the work programme and fiscal framework has led the joint venture to call Force Majeure on its licences, which is likely delay the final investment decision and impact ongoing farm-down processes. It added that constructive discussions are ongoing with the Kenyan government to find a way forward.

Half-year financial performance

The Group expects revenue for the first half of 2020 to be US$0.7billion with a realised oil price of US$52/bbl, including hedge receipts of US$131million. It has hedged 60 percent of its sales this year at a floor price of US$57 a barrel and 44 percent of next year’s at a floor of US$51 a barrel.

Meanwhile, as of June 30, 2020, net debt was estimated to be US$3billion and liquidity headroom and free cash of US$0.5billion. Its market capitalisation was US$508million as of July 28. Tullow is also set to book US$1.4-1.7billion in impairments before tax in its half-year results, due on September 9.

Full-year cash flow is forecast to break-even at current prices, the statement added.

“Despite the challenging external environment in first-half of the year, Tullow has performed well; delivering production in line with forecast, agreeing with the sale of the Ugandan assets, and re-shaping the Group’s structure and cost base.

In the second half of 2020, our focus will remain on continuing to deliver safe and reliable production from West Africa, reducing debt and building a cost-effective and efficient organisation that can compete in a low oil price environment,” said new Chief Executive Officer of Tullow Oil plc, Rahul Dhir, who took over at the beginning of this month.

PRODUCTION GUIDANCE