Tullow Oil records $777m revenue in half-year results amidst volatile market conditions
In a turbulent global energy landscape, Tullow Oil PLC has emerged with notable financial fortitude, as evidenced by its robust half-year performance. The London-based energy giant reported first-half revenue figures of $777 million, underpinned by a substantial gross profit of $351 million. Impressively, the company secured a profit after tax amounting to $70 million.
This financial resilience comes as Tullow Oil marks a significant milestone with the commencement of Jubilee South East operations, signaling a substantial upswing in production and, consequently, free cash flow. The company remains steadfast in its pursuit of its 2023-2025 business plan, aiming to generate an estimated $800 million in free cash flow during this timeframe.
Financial insights reveal an underlying operating cash flow of $188 million, demonstrating the company’s operational stability. However, despite considerable investments, free cash flow stood at $(142) million, a testament to Tullow’s unwavering commitment to strategic growth and sustainability. Capital investments reached $187 million, accompanied by a provision of $44 million for decommissioning costs.
Tullow’s financial posture remains sturdy, with net debt standing at $1.9 billion and a gearing ratio of 1.7x (net debt/EBITDAX). The company retains a healthy liquidity headroom of $0.7 billion, ensuring financial stability in the face of market uncertainties.
Looking ahead, Tullow has narrowed its full-year oil production guidance to 58 to 60 kbopd, supplemented by an expected additional c.7 kboepd of gas production from its Ghanaian operations. Capital expenditure projections remain unchanged at approximately $400 million, with decommissioning spend anticipated to reach c.$70 million. Notably, the second half of the year is expected to witness a substantial reversal in free cash flow, with an estimated c.$200 million generated at an assumed oil price of $80/bbl. The full-year free cash flow guidance remains steady at c.$100 million under these conditions.
As the year unfolds, Tullow anticipates year-end net debt to hover around c.$1.7 billion, with gearing projected at approximately 1.5x (net debt/EBITDAX). The company remains committed to its long-term strategic objectives, focusing on generating c.$800 million in free cash flow between 2023 and 2025, bolstered by a promising production outlook and agility in capital expenditure. Furthermore, Tullow is actively exploring a range of options to address upcoming debt maturities, positioning the business for a successful refinancing and ensuring sustained growth in a rapidly evolving energy sector.
Tullow Oil PLC’s resilience in the face of market volatility underscores its commitment to sound financial stewardship and strategic growth.
