Tullow Oil initiates TEN shutdown to enhance gas handling, reduce flaring
Tullow Oil PLC has announced that it has commenced the planned shutdown of its TEN (Tweneboa, Enyenra, Ntomme) oilfield in Ghana as part of efforts to improve gas handling processes and reduce flaring. The company aims to finalize the amended TEN Plan of Development following positive engagements with the Government of Ghana, as mentioned in its latest financial update.
During the first half of 2023, Tullow reported high production efficiency across the TEN and Jubilee Floating Production, Storage, and Offloading (FPSO) vessels, achieving an average uptime of 97%. Notably, gross production from the Jubilee field is expected to surpass 100,000 barrels of oil per day (bopd) with the imminent start-up of the Jubilee South East project. This development is set to enhance Tullow’s operational capabilities and generate increased cash flow, supporting the company’s deleveraging efforts.
Furthermore, Tullow highlighted ongoing discussions with the Government of Ghana regarding the long-term gas sales agreement. If finalized, the agreement is expected to bolster energy security in Ghana while also providing Tullow with an additional revenue stream. Additionally, it would contribute approximately 150-200 billion cubic feet (bcf) of net gas reserves to the TEN field.
Rahul Dhir, Chief Executive Officer of Tullow, expressed enthusiasm about the company’s prospects, particularly with the impending commencement of the Jubilee South East project. He emphasized that achieving a gross production exceeding 100,000 bopd would significantly contribute to Tullow’s efforts to reduce debt and generate positive cash flow.
In terms of financial performance, Tullow reported total revenue of approximately $0.8 billion in the first half of the year, considering hedging costs, with an average realized oil price of around $81 per barrel before hedging and $74 per barrel after hedging. Capital expenditure for the period reached approximately $200 million, and the company maintains its full-year capital expenditure guidance of around $400 million.
Tullow’s net debt at the end of the first half of 2023 was approximately $1.9 billion, with a projected reduction to around $1.7 billion by year-end. The company recently repurchased $166 million of its 2025 Notes, resulting in value accretion through net debt reduction and coupon savings.
To protect against downside risks, Tullow has reinstated its commodity hedging policy, ensuring 60% downside protection for the upcoming year and 30% for the subsequent year while maintaining exposure to upward price movements.
Tullow Oil remains committed to its operational endeavors in Ghana and looks forward to optimizing its asset ownership and sustaining production levels to capitalize on the vast potential of the Jubilee field.
