Tullow Oil to spend 60% of $250m capital expenditure on Jubilee Field
Tullow Oil is set to deploy approximately $250 million in capital expenditures for 2024, with a strategic allocation of around 60% directed towards bolstering operations in the prolific Jubilee field. A further 25% is earmarked for non-operated assets, underscoring the company’s meticulous approach to capital allocation.
The company has earmarked a decommissioning spend of $50 million for assets in the UK and Mauritania, alongside a $20 million provisioning for decommissioning activities in Ghana and Gabon. This commitment aligns with Tullow Oil’s broader agenda of sustainable asset management.
With an assumed oil price of $80 per barrel, Tullow Oil foresees cash taxes to the tune of $350 million, with a notable front-loading of payments expected in the first half of the year. The company remains attuned to the evolving taxation dynamics in the industry.
Furthermore, Tullow Oil’s robust hedging strategy shields approximately 60% of forecasted sales volumes, maintaining a weighted average price of $58 per barrel throughout the fiscal year. Of particular note is the company’s uncapped exposure to potential oil price upside, with around 20% of sales volumes capped at a weighted average price of $114 per barrel from June onward.
Projections by the company indicate a free cash flow range of $200 million to $300 million at an assumed oil price of $80 per barrel. The variability in this range is attributed to the nuanced timing of revenue receipts from the 18 to 19 cargoes slated for lifting in Ghana during the fiscal year.
Tullow Oil anticipates a year-end net debt below $1.4 billion, highlighting a robust financial position. Cash gearing, measured by net debt to EBITDAX, is estimated to be around one times at the assumed oil price of $80 per barrel.
On its operational outlook for the year 2024, the company aims for an ambitious working interest production target, averaging between 62 to 68 thousand barrels of oil equivalent per day (kboepd) in 2024, including approximately 7 kboepd of gas.
Tullow Oil is set to bring five Jubilee wells (three producers and two water injectors) onstream in 2024, demonstrating commendable drilling performance and surpassing initial expectations by six months. A strategic drilling hiatus in Ghana is envisaged later in the year, with a focus on resuming activities in 2025 and initiating the procurement process for a new rig.
The non-operated portfolio will witness concentrated efforts on infill drilling and an infrastructure-led exploration well at the Simba license, reflecting Tullow Oil’s commitment to optimizing its broader asset base.
