Tullow Oil Achieves Targets, Rethinks Kenya’s Plan
Tullow has met its financial goals and is looking to scale down its operations in Kenya as it focuses more on its operations in Ghana.
Company CEO Rahul Dhir said Tullow achieved a “strong operational performance” in the first half of the year, its debt refinancing put it “on a solid footing to achieve our plan. ‘business”.
Tullow’s direct interest in the first half was 61,230 barrels of oil equivalent per day. Performance in Ghana has been good, the company said, with the top producer in the recent drilling campaign delivering higher volumes than expected.
Tullow reported revenue of $ 727 million for the first six months of the year, with after-tax profit of $ 93 million. Free cash flow was $ 86 million.
Administrative costs are down 50% year over year, while capital spending hit $ 101 million.
At the end of June, net debt stood at $ 2.3 billion, with free cash flow of $ 700 million. The debt refinancing involved the issuance of $ 1.8 billion in senior secured notes, along with a new $ 500 million revolver.
Tullow finalized the sale of its assets in Equatorial Guinea and Gabon in March and June, receiving $ 133 million. More is on the way.
Dhir said the revised development plan in Kenya has created “a robust project that has the potential to bring material value to the government of Kenya and other stakeholders”.
Companies working on the South Lokichar project are now looking for a strategic partner to develop this resource. The plan would be to find a partner before a final investment decision (FID).
The new plan in Kenya involves a higher production plateau of 120,000 bpd, producing 585 million barrels of oil over the life of the project.
The plan incorporates the results of the Early Oil Pilot Scheme, which produced oil from the Amosing and Ngamia fields. Today, the company sees the ratio of producing wells to injecting wells falling from 2: 1 to 1: 1. This will increase the recovery of the tank.
Other changes to the plan include the addition of the Ekales field to the first phase. This will now cover four fields: Ngamia, Ekales, Amosing and Twiga (NEAT), providing 390 mn of barrels out of a total of 585 mn.
The facility will have a capacity of 130,000 bpd, while the pipeline size will increase to 20 inches from 18 inches previously.
Tullow’s new plan in Kenya would cost $ 3.4 billion gross. This is an increase from the previous plan, but reduces the cost per barrel from $ 31 to $ 22.
Partner Africa Oil said costs included $ 2 billion for the upstream and $ 1.4 billion for the pipeline.
The company also stressed the importance of controlling carbon emissions. The combination of heat conservation, associated gas for electricity, and gas re-injection would improve these metrics. Tullow can go so far as to use the Kenyan national grid.
Along with the development, the company would launch an exploration and evaluation plan around blocks 10BB and 13T, in addition to blocks 10BA and 12B.
Kenya has extended Tullow’s license until the end of 2021. There are certain conditions attached to it, such as the submission of a technically and commercially compliant field development plan.
Updated with Kenya’s outage costs of Africa Oil at 8:50 a.m.