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RNS Number : 0115X
Tullow Oil PLC
25 April 2019
AGM Trading update
25 April 2019 - Tullow Oil plc (Tullow) issues the following
Trading Update for the period 1 January to 25 April 2019. This
statement is issued in advance of the Group's Annual General
Meeting (AGM) which is being held at Tullow Oil plc, Building 9,
Chiswick Park, London, W4 5XT at 12pm today. The Group will
announce its Trading Statement and Operational Update on 26 June
2019 and Half Year Results will be announced on 24 July 2019.
PAUL MCDADE, CHIEF EXECUTIVE OFFICER, TULLOW OIL PLC, COMMENTED
TODAY:
"At today's AGM, the Board will be asking Tullow shareholders to
approve the Group's first dividend payment since 2014. This 2018
final dividend and our new dividend policy, which is expected to
deliver at least $100 million per year to shareholders, reflect the
financial and operational progress that Tullow has made over the
past few years. Oil production from our West African portfolio is
currently running at 95,000 bopd after a short-term production
issue in the first quarter and is due to grow in the second half of
the year and beyond. In South America, our exploration team is busy
preparing for our exciting exploration campaign in Guyana."
Trading Update summary
-- First quarter 2019 Group oil production averaged 84,600 bopd.
This was below expectations following technical issues, now
resolved, in Ghana. Group full year oil production guidance revised
to 90,000 - 98,000 bopd
-- Current net production is c.95,000 bopd and is expected to
rise to 100,000 bopd as additional Ghana wells come on stream
-- Three-well exploration programme in Guyana to commence in
June 2019 with the drilling of the Jethro and Joe prospects on the
operated Orinduik licence. The Carapa well on the non-operated
Kanuku licence is anticipated to commence 3Q 2019
-- At 31 March 2019, net debt was $3 billion with $1 billion of
liquidity headroom and no near-term debt maturities
-- 2018 final recommended dividend of 4.8c/share (c.$67
million). New dividend policy of no less than $100 million per
annum
-- Uganda FID planned for the second half of 2019; farm-down
approval being finalised with Government of Uganda
-- Project Oil Kenya development continues to progress; late
2019 FID contingent on key Government of Kenya deliverables
-- Three new licences won in the Malvinas West Basin in the
recent Argentina bid round with work due to begin in 2020
-- Sheila Khama and Genevieve Sangudi to join Tullow's Board as
Non-Executive Directors. Tutu Agyare retires from the Board after
nine years' much-valued service
Board Update
On 28 February 2019, Tullow announced that Tutu Agyare will
resign as a Non-Executive Director, with effect from the conclusion
of today's AGM. Tutu joined Tullow in 2010 as a Non-Executive
Director and has provided significant support and insight to Tullow
and has been a member of several Board committees, including
chairing the Remuneration Committee for the past two years. Tullow
also announced the appointment of Sheila Khama and Genevieve
Sangudi as Non-Executive Directors of Tullow with effect from 26
April 2019. Sheila and Genevieve will stand for election to the
Board at the 2020 AGM.
Operational Update
WEST AFRICA
Production
Working interest production for the first quarter of 2019
averaged 84,600 bopd, including production-equivalent insurance
payments. This performance was below expectations due to gas
compression constraints on Jubilee during February and a delay in
completing the Enyenra-10 production well at the TEN field. Both
issues have now been resolved: gas compression on Jubilee has been
reinstated and the Enyenra-10 production well has been successfully
completed and came onstream in early March.
The lower production from Ghana has been partially offset by
strong performance from the Central and West Africa non-operated
portfolio, with the new Simba and Ruche fields in Gabon
significantly exceeding expectations.
The Group is currently producing over 95,000 bopd and, with an
additional TEN production well due onstream before the half-year,
Tullow's net oil production is expected to rise to 100,000 bopd in
the second half of 2019. To account for the lower performance in
the first quarter, the 2019 production forecast range has been
adjusted from 93,000-101,000 bopd to 90,000-98,000 bopd. This
forecast includes production-equivalent insurance payments of 1,000
bopd from Tullow's Corporate Business Interruption insurance.
Working interest gas production for the full year is expected to
average 1,000 boepd.
A full breakdown of production for the first quarter and the
full year forecast is provided at the end of this release.
Drilling
The Stena Forth and Maersk Venturer drillships have been working
in tandem on Ghana drilling and completion operations throughout
the first quarter with three wells drilled and two wells completed.
The Stena Forth will cease operations in Ghana at the end of May
and will move to Guyana in June. The Maersk Venturer will continue
with drilling and completion operations in Ghana.
EAST AFRICA
Kenya
Tullow continues to target a Final Investment Decision (FID) in
Kenya by year-end although this remains an ambitious target. Tullow
is finalising its FEED studies for both the upstream and midstream,
and both the upstream and midstream ESIAs remain on track for
submission to the National Environmental Management Agency at the
end of the second quarter. The Government of Kenya, via the
National Land Commission, has gazetted the land required for the
upstream development in Turkana and, so far, approximately
two-thirds of the pipeline. Discussions with Government regarding
key commercial agreements are making steady progress. A late 2019
FID remains contingent on these key Government of Kenya
deliverables.
The Early Oil Pilot Scheme continues to truck 600 bopd to
Mombasa where 80,000 barrels of oil are being stored ahead of
export. Following receipt of Regulatory Authority approval, which
is expected shortly, production will be increased to 2,000 bopd,
with the first export cargo expected in the third quarter of
2019.
Uganda
As previously disclosed, following meetings in January 2019
between the CEOs of both Tullow and Total and H.E. President
Museveni of Uganda, Tullow has agreed the principles for the tax
treatment of its $900 million farm-down to CNOOC and Total.
Discussions with the Government and the Joint Venture Partners are
ongoing to finalise an agreement reflecting this tax treatment.
These discussions are expected to conclude shortly and will enable
completion of the farm-down.
The Joint Venture Partners continue to work towards reaching FID
for the development project in the second half of 2019 with the
project making good technical and operational progress in the first
quarter of this year.
NEW VENTURES
In Guyana, Tullow plans to drill two wildcat wells on the
Orinduik licence from June 2019 onwards using the Stena Forth
drillship. The first well will target the Jethro prospect which is
a Lower Tertiary target in approximately 1,350 metres of water. The
second well will be the Joe prospect, an Upper Tertiary target in
water depths of approximately 650 metres. Both wells are targeting
prospects of 100 to 200 million barrels of oil. The Carapa-1 well
on the non-operated Kanuku block is expected to be drilled in the
third quarter of 2019. The Carapa prospect is a 200 million barrel
Cretaceous target located in 70 metres of water and will be drilled
using a jack-up rig. Preparations for this well are ongoing.
The Group also continues to seek to access new acreage in both
Africa and South America. Earlier this month, Tullow won three
blocks in the Malvinas West Basin, offshore Argentina, in a highly
competitive bidding round with formal awards to be made later this
year. Tullow has secured 100% equity in block MLO-122 and 40%
equity in blocks MLO-114 and MLO-119, in partnership with
Pluspetrol and Wintershall. The shallow water, Tertiary and
Cretaceous age turbidite plays in this underexplored acreage
compliment Tullow's existing South America portfolio. The
multi-year low-cost, low-commitment work programmes also adhere to
Tullow's strict commercial criteria. Tullow plans to start initial
geological studies, 2D reprocessing and 3D acquisition in 2020.
Elsewhere within the portfolio, Tullow continues to work up
prospects to compete for capital for drilling in 2020 and beyond in
Mauritania, Côte d'Ivoire, Jamaica, Peru and Suriname.
Financial Update
On 31 March 2019, Tullow had total facility headroom and free
cash of $1 billion, and net debt of $3 billion. Tullow's 2019
capital expenditure guidance of $570 million remains unchanged.
This excludes Uganda expenditure of $130 million (which has been
revised down from $180 million) that will be funded through the
Uganda farm-down. Tullow continues to generate strong free cash
flow with the bulk of its forecast 2019 free cash flow expected to
be delivered in the second half of the year. This reflects Tullow's
oil lifting schedule which is weighted towards the second half,
partly driven by the lower than expected production in the first
quarter of 2019. The full-year free cash flow outturn will also be
dependent on the completion of the Uganda farm-down, the oil price
and working capital movements.
As at 31 March 2019, the Group's oil hedge position was as
follows:
Oil hedge position at 31 March 2019 2019 2020 2021
======================================================================= ======= ======= =======
Volume (bopd) 54,989 30,997 6,000
======================================================================= ======= ======= =======
Average floor price protected ($/bbl) $56.40 $58.68 $55.00
The realised oil price for the first quarter of 2019 was $63.4/bbl.
======================================================================= ======= ======= =======
GROUP AVERAGE WORKING INTEREST PRODUCTION (1)
Q1 2019 Actuals FY 2019 Forecast
Oil Production (bopd) (bopd)
================================================== ================ ==================
Ghana 58,500 67,500
================================================== ================ ==================
Jubilee 28,400 33,000
================================================== ================ ==================
TEN 30,100 34,500
================================================== ================ ==================
Ghana Jubilee production-equivalent insurance
payments 1,300 1,000
================================================== ================ ==================
Equatorial Guinea 5,600 6,000
================================================== ================ ==================
Gabon 16,300 17,000
================================================== ================ ==================
Côte d'Ivoire (1) 2,900 2,500
================================================== ================ ==================
OIL PRODUCTION SUB-TOTAL (inc. Jubilee
production-equivalent) 84,600 94,000
================================================== ================ ==================
Gas Production (boepd) (boepd)
================================================== ================ ==================
Ghana (TEN) 500 1,000
================================================== ================ ==================
GROUP TOTAL (inc. Jubilee production-equivalent) 85,100 95,000
================================================== ================ ==================
(1) Includes condensate
FOR FURTHER INFORMATION CONTACT:
Tullow Oil Murray Consultants
plc (Dublin)
(London) (+353 1 498
(+44 20 3249 0300)
9000) Pat Walsh
Chris Perry Joe Heron
Nicola Rogers
George Cazenove
Notes to Editors
About Tullow Oil plc
Tullow is a leading independent oil & gas, exploration and
production group, quoted on the London, Irish and Ghanaian stock
exchanges (symbol: TLW). The Group has interests in over 85
exploration and production licences across 17 countries which are
managed as three business delivery teams: West Africa, East Africa
and New Ventures.
Follow Tullow on:
Twitter: www.twitter.com/TullowOilplc YouTube: www.youtube.com/TullowOilplc
Facebook: www.facebook.com/TullowOilplc LinkedIn: www.linkedin.com/company/Tullow-Oil
Website: www.tullowoil.com
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END
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