Tullow Oil Plc (TLW.gh) Q22022 Interim Report
13 JULY 2022 – Tullow Oil plc (Tullow) issues this update and guidance in advance of the Group’s 2022 Half Year Results scheduled for 14 September 2022. The information contained herein has not been audited and may be subject to further review and amendment. Tullow will host a call at 9am this morning, details of which can be found at the end of this statement.
RAHUL DHIR, CHIEF EXECUTIVE OFFICER, TULLOW OIL PLC, COMMENTED TODAY:
“It is two years since I joined Tullow and today, we are in a very different place. A relentless focus on costs, capital discipline and operating performance is ensuring delivery of our business plan. We have also added unhedged production through the preemption in Ghana.
Our current business plan is underpinned by assets that yield a deep portfolio of compelling investment opportunities. A continuing and comprehensive review of our resource base has identified additional opportunities to unlock material value, these include:
- Work on the TEN Enhancement Plan, which has identified significant upside to the current 2025 production target of c.50 kbopd (gross). A development concept is currently being finalised for the project, with detailed engineering expected to start later this year.
- Ghana’s gas demand is expected to continue growing strongly, supporting economic development and growth of industry. We have identified approximately 2 TCF of gas resources in Jubilee and TEN. This indigenous resource has the potential to provide energy security for Ghana, while reducing dependence on the highly competitive global LNG market.
We are preparing an integrated plan for the rapid development of this material resource.
We also continue to make progress on securing a strategic partner for Project Oil Kenya, which has the potential to be a key driver of growth, value and diversification for Tullow.
Each of these projects has the potential to deliver material returns on capital and further enhance our production and cashflow generation. The proposed merger with Capricorn is an important enabler for a new business plan of the combined group, leveraging the combined resources of both companies and underpinned in part by the accelerated implementation of these projects. With a new business plan, pre-tax cost synergies of $50 million per year, the opportunity to drive down cost of capital and further optimise capital allocation, the combined group will be well positioned to play a leading role in the African energy sector, delivering material value for all shareholders and our host nations. We are preparing a circular and prospectus for shareholders in connection with the proposed merger with Capricorn which we expect will be available in the fourth quarter ahead of a shareholder vote on this proposed merger expected towards the end of the year.”
MERGER WITH CAPRICORN ENERGY
On 1 June 2022 Tullow announced that it had reached agreement with Capricorn Energy on the terms of an all-share merger to create a leading African energy company with a material and diversified asset base and a portfolio of investment opportunities delivering visible production growth. This proposed merger will realise meaningful cost synergies and deliver a combined group with robust cash generation and a resilient balance sheet. It will also have a sustainable capital returns programme and a deep commitment to environmental stewardship, social investment, development of local content and its national workforces.
Tullow has performed well in the first half of the year and has built on the progress that the Group made in 2021. Production in the first half of the year was in line with expectations and drilling performance across the portfolio was strong.
Tullow outlined a number of critical actions for 2022 in its recent Annual Report, and is pleased to report that it has made significant progress on these:
- The pre-emption of the sale by Occidental Petroleum to Kosmos Energy of its interests in the Jubilee and TEN fields in Ghana was completed successfully in March, adding c.4 kbopd of unhedged production.
- On 1 July 2022 Tullow took over the Operation & Maintenance (O&M) of the Jubilee FPSO from MODEC. This is part of a major transformation plan to make the assets in Ghana more efficient and cost-effective, notably sustaining strong FPSO uptimes and targeting further operating cost reductions.
- Tullow and its Partners are in discussions with the Government of Ghana regarding the development of the material resources of c.2 TCF of associated and non-associated gas located in Jubilee and TEN. This will be an important contributor to the long-term energy security of the country.
- A confidential process to secure a strategic partner for the material development project in Kenya continues and Tullow is confident that it will make substantial progress in the second half of the year.
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