- Tullow Commits 97% Of First-Half Capital Spending to Ghana
Tullow Oil’s first-half results reveal a company whose future has become inseparable from Ghana.
The Jubilee and TEN fields delivered 35,700 barrels a day of net oil production during the six months to June, accounting for the overwhelming majority of Tullow’s oil output and supporting the sharp improvement in revenue and cash generation.
Ghana also absorbed US$130m of Tullow’s US$134mn group capital expenditure, approximately 97% as the company concentrated its investment on drilling, production optimisation and extending the commercial life of its core assets.
The concentration represents a significant vote of confidence in Ghana’s offshore petroleum sector. It also means that reservoir performance, government policy, gas-payment discipline and operational reliability in Ghana now have direct consequences for Tullow’s ability to service approximately US$1.4bn of net debt.
Ghana is no longer one important jurisdiction within a diversified African portfolio. It is the centre of the business.
Gross production from Jubilee averaged 70,800 barrels a day during the first half of 2026, above Tullow’s expectations. The company’s net entitlement averaged 27,600 barrels a day.
The field’s FPSO recorded uptime above 99%, a notable improvement following maintenance and reliability work during the scheduled shutdown in 2025.
The performance was supported by six new production wells brought onstream through the 2025-2026 drilling campaign. A final water-injection well entered service in September.
Tullow said production optimisation, including dual-riser operations and riser-based gas lift, had reduced decline rates from several existing wells.
Water injection experienced unexpected downtime during the second quarter, but voidage replacement remained above 100% during the half year and was showing an improving annual trend.
These technical details are important. Jubilee is a mature producing field. Its long-term value will be determined not simply by drilling additional wells but by maintaining reservoir pressure, controlling decline rates and extracting more oil from infrastructure that has already required substantial investment.
FPSO uptime above 99% increases the number of days during which oil can be processed and exported. Effective water injection supports reservoir pressure. Successful gas lift and well intervention slow natural decline.
Together, these measures can produce barrels at a lower incremental cost than an entirely new offshore development.
TEN exceeds expectations but remains the smaller engine Gross production from TEN averaged 14,800 barrels a day, with Tullow’s net share at 8,100 barrels.
The field performed above expectations but remained materially smaller than Jubilee. Its future importance may nevertheless increase as Tullow seeks to use shared infrastructure and operational integration to lower unit costs.
Tullow agreed in February to acquire the TEN FPSO for net consideration of about US$126mn, payable when the transaction is expected to complete at the end of the first quarter of 2027.
Ownership could give Tullow greater control over operating expenditure, maintenance decisions and the pace of future development. It may also allow closer integration between TEN and neighbouring Jubilee operations.
But the acquisition creates an additional capital requirement at a time when Tullow is seeking to reduce debt.
The commercial case therefore depends on whether FPSO ownership produces enough savings and operational flexibility to justify the upfront payment and continuing maintenance obligations.
Tullow is also considering further TEN infill drilling, gas commercialisation and well interventions. Heads of terms have been agreed for the potential supply of gas from TEN, while revised terms cover Jubilee gas deliveries through 2040.
If these projects progress, TEN could move from being a declining secondary asset to a more integrated component of Ghana’s offshore production system.
Tullow’s capital allocation illustrates the scale of Ghana’s importance more clearly than its corporate language.
Of the US$134m invested during the first half, US$130m went to Ghana. Full-year capital expenditure is projected at approximately US$200m, of which US$195m is expected to be spent in Ghana.
About US$185m of the Ghanaian amount is allocated to Jubilee, including approximately US$150m in drilling costs.
The spending profile means Ghana is receiving almost the entire productive investment budget of a London-listed oil company. That has implications for local suppliers, employment, government revenue and the development of technical capabilities.
It also creates questions about local content and domestic value retention.
Ghana’s policy interest should extend beyond the total amount invested. Authorities should examine how much of the expenditure is captured by Ghanaian companies, how local technical capacity is being developed and whether the next drilling campaign creates durable opportunities beyond the immediate procurement cycle.
Tullow has signed a rig contract covering up to 10 wells in a new 2027-2028 programme. The rig is expected to arrive around the middle of 2027.
Targets will be selected using 4D seismic data and additional information from an Ocean Bottom Node survey. The improved subsurface imaging should reduce drilling risk and help distinguish between targets capable of supporting production and those better treated as longer-term resources.
Licence extension changes the reserve picture Parliament’s extension of the West Cape Three Points and Deepwater Tano petroleum agreements to 2040 has altered the economics of Jubilee and TEN.
The additional tenure gives Tullow and its partners more time to recover investments in drilling, subsea equipment, gas commercialisation and enhanced recovery.
It also contributed substantially to the increase in Tullow’s 2P reserves from 100.2 million barrels of oil equivalent at the end of 2025 to 121.7m at June 2026.
The company reported a reserves-replacement ratio of about 380%. That figure is commercially important, but it must be interpreted carefully.
Part of the increase arose because the licence extension allowed additional production and projects to qualify as reserves. Further additions came from approved drilling commitments, the maturation of Teak gas and better-than-expected well performance.
The increase therefore reflects a combination of improved asset performance, regulatory tenure and project maturation rather than a single large discovery.
For Ghana, this demonstrates the economic value of licence decisions. Extending a petroleum agreement can convert resources into investable reserves and stimulate new capital expenditure.
But it also transfers additional years of production rights to existing contractors. The state must therefore ensure that fiscal, local-content, decommissioning and gas-supply terms remain aligned with the public interest over the extended period.
Tullow recovered US$73m of historic gas receivables from the Government of Ghana during the first half of the year. It said the remainder of the old balance had been paid by September 28.
The company also recovered US$23m relating to gas supplied during 2026.
Ghanaian gas sales contributed US$29m to first-half revenue. Tullow exported 20.252bn cubic feet of gas during the period at an average price of US$3.05 per million British thermal units.
Settlement of the historic receivables is significant for both parties.
For Tullow, it releases cash that can be used for drilling, debt service and investment. For Ghana, it helps restore credibility to a gas market in which delayed payments have historically discouraged upstream investment and weakened the finances of producers.
The revised Jubilee gas arrangements include a payment-security mechanism. That feature may be as important as the agreed price because upstream companies evaluate the reliability and timing of payment alongside the nominal value of a contract.
The next challenge is to ensure that arrears do not begin accumulating again.
Ghana requires dependable domestic gas to support electricity generation and reduce reliance on imported liquid fuels. Producers require assurance that delivered gas will generate predictable cash flow. A sustainable market must satisfy both conditions.
Tullow’s underlying cash operating costs in Ghana fell to US$63m, equivalent to US$7.80 per barrel of oil equivalent, from US$88m or US$12.40 per barrel a year earlier.
Part of the reduction reflected the absence of US$21m in non-recurring costs associated with the 2025 construction-support vessel and shutdown campaign. Revisions to earlier cost estimates also contributed.
The improvement nevertheless strengthens the economics of the Ghana portfolio. Lower unit costs provide greater protection during periods of weaker oil prices and allow more operating cash to flow towards investment and debt reduction.
But the lower first-half figure should not automatically be treated as a permanent cost base. Offshore fields require periodic shutdowns, major maintenance and subsea intervention. Costs can rise sharply depending on the timing of these activities.
The more relevant measure will be whether Tullow can maintain competitive average costs across a full investment and maintenance cycle.
Tullow’s group net debt was US$1.398bn at June 30. Although this was lower than the US$1.640bn recorded in June 2025, it was US$45m higher than at the end of December. Refinancing costs, reduced cash balances and additional obligations contributed to the increase.
The refinancing pushed the principal maturity problem from 2026 to 2028, but it did not eliminate the debt itself.
Ghana’s oil fields must consequently perform several financial roles simultaneously.
They must fund ongoing operations, finance new drilling, meet tax obligations, support decommissioning provisions, pay interest and generate sufficient surplus cash to reduce principal debt.
This is why FPSO uptime, cargo timing and well decline rates matter to creditors as much as they matter to petroleum engineers.
Tullow expects 11 Jubilee cargoes and three TEN cargoes during 2026. Five Jubilee cargoes and one TEN cargo were lifted in the first half, leaving eight cargoes planned for the second half.
The timing of those liftings will strongly influence second-half cash flow.
Tullow continues to contest two Ghanaian tax assessments concerning the disallowance of loan-interest deductions for 2010 to 2020 and proceeds received under a business-interruption insurance policy.
Both disputes were referred to international arbitration in 2023.
A hearing concerning the insurance proceeds took place in November 2025, with Tullow saying a ruling was expected imminently. The first hearing in the loan-interest arbitration has been postponed to 2027.
Tullow increased its related provision by US$30m during the first half to reflect management’s estimate of the most likely outcome.
The provision suggests that, while the company continues to contest the assessments, management now expects a greater financial cost than previously recognised.
Tullow said it continued to engage the Government of Ghana and the Ghana Revenue Authority to seek a mutually acceptable resolution.
The issue illustrates the complexity of Ghana’s relationship with the company. The state is simultaneously a regulator, tax authority, resource owner, gas purchaser and long-term commercial counterparty.
Stable relations do not require the absence of disputes. They require clear rules and mechanisms capable of resolving those disputes without undermining future investment or surrendering legitimate public revenue.
Tullow’s Ghanaian outlook is stronger than it appeared a year ago. Jubilee is outperforming expectations, TEN has stabilised above forecast, the latest drilling campaign delivered six producers, gas arrears have been recovered and petroleum agreements now run to 2040.
The next drilling campaign, the TEN FPSO acquisition, subsea pumps and possible gas developments provide credible avenues for further production and reserves.
But the concentration of Tullow’s portfolio in Ghana also creates risk for the company and the country.
For Tullow, a prolonged outage, disappointing wells, adverse tax ruling or deterioration in state relations would have an outsized financial effect.
For Ghana, the financial pressure on Tullow means investment decisions will remain tied to oil prices, debt obligations and creditor expectations. A company focused on deleveraging may prioritise projects offering rapid payback over developments with greater long-term national value.
The alignment of interests is therefore real but incomplete. Ghana wants sustained production, domestic gas, employment, local procurement, tax revenue and responsible decommissioning. Tullow needs reliable operations, predictable fiscal terms, payment discipline and sufficient cash flow to repair its balance sheet.
The first half of 2026 shows that Jubilee and TEN can support both objectives.
The next test is whether operational recovery becomes a durable investment cycle and whether the value created offshore is shared in a way that strengthens both Tullow’s finances and Ghana’s economy.
