Tullow Oil Records First Half Revenue of $759 Million, Profit After Tax of $196 Million
Tullow Oil recorded revenue of $759 million in the first half of 2024, down slightly from $777 million in the same period last year.
The realised oil price after hedging increased to $77.7 per barrel from $73.3 per barrel in 1H 2023. Gross profit rose significantly to $460 million from $351 million, while profit after tax jumped to $196 million, up from $70 million.
Capital Expenditure and Free Cash Flow
The company reduced its capital expenditure to $157 million from $187 million in the previous year, with decommissioning spending also down to $9 million from $44 million.
Free cash flow was negative at $(126) million, compared to $(142) million in 1H 2023, reflecting the timing of tax payments and front-loaded capital expenditure.
Debt and Liquidity
Net debt decreased to $1.7 billion as of 30 June 2024, down from $1.9 billion a year earlier, with cash gearing improving to 1.4x net debt/EBITDAX from 1.7x. Liquidity headroom remained steady at $0.7 billion.
Production and Capex Guidance
Tullow expects 2024 Group working interest production to be at the lower end of the 62-68 kboepd range, primarily due to the underperformance of a Jubilee well that came onstream in February 2024.
Full-year capex and decommissioning guidance has been adjusted to approximately $230 million and $70 million, respectively, reflecting a $20 million decrease in both Ghana and Gabon.
Outlook for Second Half of 2024
The company anticipates a significant uplift in free cash flow in the second half of 2024, maintaining its full-year guidance of $200-300 million at an oil price of $80 per barrel. With legacy hedges rolling off in May 2024, Tullow has increased exposure to oil price upside, with an average floor of $60 per barrel and capped upside of $112 per barrel for the second half.
Debt Management and Future Plans
Tullow’s year-end net debt guidance remains unchanged at less than $1.4 billion, with a gearing target of around 1x net debt/EBITDAX. The company has no uncovered debt maturities until May 2026 and is exploring options to manage its debt maturities and optimize its capital structure.
The outcome of arbitration regarding Ghana Branch Profits Remittance Tax is expected in the second half of 2024. Tullow remains committed to deleveraging and aims to reduce net debt to less than $1 billion and cash gearing to less than 1x in the near term.
