TIDMTLW TIDMTTM TIDMTTM
RNS Number : 1829T
Tullow Oil PLC
13 November 2019
THIS PRESS RELEASE CONTAINS INSIDE INFORMATION
Tullow Oil plc
November Trading Update
13 November 2019 - Tullow Oil plc (Tullow) issues the following
Trading Update for the period 24 July to 13 November 2019.
The Group will publish a Trading Statement and Operational
Update on 15 January 2020 and Full Year Results for 2019 will be
announced on 12 February 2020.
PAUL MCDADE, CHIEF EXECUTIVE OFFICER, TULLOW OIL PLC, COMMENTED
TODAY:
"Tullow expects to deliver robust free cash flow for the full
year. This has been supported by our continued disciplined capital
investment and underlines our commitment to further reduce our debt
and pay returns to shareholders. Since the Group's last update,
Tullow announced two oil discoveries in Guyana at Jethro and Joe,
and recent analysis has shown that at these locations we have
encountered heavy oil. We remain confident in the broader light oil
potential of the Orinduik and Kanuku blocks located in this
prolific oil basin. The first ever cargo of East African oil from
Mombasa in August was an important milestone for Project Oil Kenya
and we continue to make good progress with FID targeted in the
second half of 2020. In West Africa, our non-operated assets
continue to perform well. However, Ghana production has not met our
expectations this year and we are working closely with our Joint
Venture Partners to ensure that both fields perform to their
potential."
Trading Update summary
-- Full year 2019 West Africa net oil production from Ghana and
non-operated portfolio forecast to average c.87,000 bopd
-- Full year capex forecast of c.$540 million, free cash flow
forecast of c.$350 million, full year net debt of c.$2.8
billion
-- Uganda farm-down lapsed; Tullow and Joint Venture Partners
remain committed to the Lake Albert Development
-- Kenya exports East Africa's first cargo of 240,000 barrels of oil from Mombasa
-- Good progress on Project Oil Kenya; targeting Final Investment Decision (FID) late 2020
-- Guyana exploration programme delivers two Tertiary oil
discoveries; Carapa well underway targeting Cretaceous play
-- 3D seismic survey completed in the Comoros; preparations
underway for exploration well in Peru in the first quarter of
2020
Operational Update
GROUP PRODUCTION
Full year 2019 Group oil production, including
production-equivalent insurance payments, is forecast to average
around 87,000 bopd. This is slightly below guidance primarily due
to Ghana production performance as detailed below. Gas sales from
TEN are expected to average around 125 boepd for the full year.
WEST AFRICA
Ghana
Drilling programme
Tullow continues to carry out its infill drilling programme
across the Jubilee and TEN fields using the Maersk Venturer rig. As
reported in Tullow's 2019 Half Year Results, the En14-P production
well at TEN was suspended in July. Consequently, the completion of
the paired water injector well, En16-WI, was also postponed. The
rig then moved to Jubilee and has successfully completed one
production well and drilled one water injection well. This will be
followed by the completion of the water injector and a well
workover.
Tullow expects to continue to use the Maersk Venturer rig across
both the TEN and Jubilee fields in 2020. The well programme is
being developed with the Joint Venture Partners and will be
finalised by the end of the year.
Jubilee and TEN Fields
At Jubilee, gross full year 2019 production is forecast to be
around 89,000 bopd (c.31,500 bopd net). The lower than forecast
full year outcome is predominantly due to topside issues which have
constrained water injection and gas handling. Water injection will
be returned to full capacity by the end of November and
enhancements to the gas handling system are planned for early 2020
to increase gas throughput capacity which will reduce gas
management constraints. Production-equivalent insurance payments
ended in May 2019 and, following a final reconciliation, the
average for the full year is 2,000 bopd net.
At TEN, gross full year 2019 production is forecast to be around
62,000 bopd (c.29,000 bopd net). During 2019, production has been
impacted by the suspension of the EN14-P well and therefore
production has drawn on fewer wells than planned. TEN associated
gas sales are forecast to average around 125 boepd for the full
year.
Gas export from both fields has been limited in 2019 due to low
demand from the Ghana National Petroleum Company (GNPC).
Discussions on increasing gas offtake are ongoing with GNPC with an
increase anticipated towards year end. Sustaining increased levels
of gas offtake will reduce the amount of gas being reinjected into
the fields, improving oil production over time.
Tullow and its Joint Venture Partners in Ghana continue to
assess the appropriate investment programme in 2020 to improve the
performance of the fields and their facilities. This includes
re-assessing both the infill drilling programme and future
development plans to ensure that the significant remaining reserves
and resources at Jubilee and TEN are produced in the most
cost-effective and efficient manner in 2020 and beyond. Guidance
for 2020 will be provided in Tullow's Trading Statement and
Operational Update in January 2020.
Non-operated Portfolio
The West Africa non-operated portfolio has continued to perform
strongly and production from the fields in Gabon, Côte d'Ivoire and
Equatorial Guinea is forecast to average around 25,000 bopd net in
2019. During the year, production from Gabon has been particularly
strong, with the Simba and Ruche fields performing ahead of
expectations.
Decommissioning
Decommissioning in the UK North Sea continues to progress as
planned. At Tullow's operated licences, final equipment removal and
seabed clearance activities continue and are expected to be
completed around the middle of 2020. In Mauritania, the
decommissioning programme for the wells in the Chinguetti field is
due to commence by the end of 2019.
EAST AFRICA
Kenya
On 26 August 2019, East Africa's first ever export of oil, a
cargo of 240,000 barrels, was flagged off from the port of Mombasa
by HE Uhuru Kenyatta, the President of Kenya. This was the first
lifting of oil from the Early Oil Pilot Scheme (EOPS) to the
international market. The EOPS production of 2,000 bopd continues
with oil being transported by road from Lokichar to Mombasa.
Following the signing of the commercial Heads of Terms with the
Government of Kenya in June 2019, Project Oil Kenya continues to
make good progress. The upstream and midstream Engineering,
Procurement and Construction (EPC) tenders are expected to be
issued to the market by the end of 2019. Well tender activities are
on track, with bids received and evaluations ongoing. The midstream
Environmental and Social Impact Assessment (ESIA) has been
submitted to the National Environment Management Authority (NEMA)
with approval expected in the first quarter of 2020. Consultations
for the upstream ESIA are ongoing, ahead of the ESIA being shared
with NEMA before the end of the year.
The Government of Kenya continues to provide strong support on
land acquisition, and the National Lands Commission has now
completed over 75 percent of the midstream land surveys and
valuations. This work is now complete in four out of six counties
affected. A draft framework agreement for use of water from the
Turkwel Dam has been prepared and is currently being
negotiated.
The Joint Venture Partners and the Government of Kenya are set
to commence discussions with prospective lenders for the project
financing of the export pipeline that will run from Turkana to the
new Lamu Port at Manda Bay.
The FID for Project Oil Kenya continues to be targeted in the
second half of 2020.
Uganda
In August 2019, Tullow announced that its farm-down to Total and
CNOOC lapsed following the expiry of the Sale and Purchase
Agreements (SPAs). The expiry of this transaction was a result of
being unable to agree all aspects of the tax treatment of the
transaction with the Government of Uganda which was a condition
precedent to completing the SPAs. While Tullow's capital gains tax
position had been agreed, as announced in the Group's 2018 Full
Year Results, the Ugandan Revenue Authority and the Joint Venture
Partners could not agree on the transfer of capital allowances
related to the consideration to be paid by Total and CNOOC as
buyers. Since the deal lapsed, Total has also suspended work on the
East Africa Crude Oil Pipeline (EACOP) project.
Tullow retains a 33.33% stake in the Lake Albert project which
has over 1.7 billion barrels of discovered recoverable resources
and is expected to produce over 230,000 bopd at peak production.
The Joint Venture Partners remain supportive of the development and
conversations with the Government of Uganda are ongoing. Tullow
remains committed to reducing its equity stake in the project ahead
of FID and when appropriate will initiate a new sales process to
achieve this.
NEW VENTURES
South America
Tullow announced two oil discoveries in Guyana at the Jethro-1
well and the Joe-1 well in the Tullow-operated Orinduik licence in
August and September respectively. The Jethro-1 well discovered 55
metres of net pay in high-quality sandstone reservoir in the Lower
Tertiary and Joe-1 encountered 14 metres of net pay, opening a new
play in the Upper Tertiary.
Following the completion of well operations, oil samples were
sent for laboratory analysis and results indicate that the oils
recovered from both Jethro-1 and Joe-1 are heavy crudes, with high
sulphur content. Tullow and the Joint Venture Partners are
assessing the commercial viability of these discoveries considering
the quality of the oil, alongside the high-quality reservoir sands
and strong overpressure.
The discoveries have proven two different oil plays in this
highly prolific basin, and Tullow remains confident of the
potential across the multiple prospects in both the Cretaceous and
Tertiary throughout the large Orinduik and Kanuku blocks. While the
results from the Jethro and Joe wells in the far north of our
acreage continue to be evaluated, the petroleum system models are
being updated in pursuit of additional prospects and lighter oil in
the area and, together with the Carapa well result, these will
inform the 2020 drilling campaign.
The Carapa well in the non-operated Kanuku licence, which is
targeting the Cretaceous play is currently drilling. The well
started at the end of October, with results expected before the
year-end.
Elsewhere in South America, Tullow has been formally awarded its
Argentina licences for a 100% operated stake in Block MLO-122 and
40% operated stakes in Blocks MLO-114 and MLO-119. Tullow is
currently reprocessing previously acquired seismic data, with a
plan in preparation to commence a new 3D survey covering
approximately 10,000 sq km over Blocks MLO-114 and
MLO-119.
Preparations continue for the non-operated Marina-1 well to be
drilled in Block Z-38 in Peru in the first quarter of 2020. The
Marina prospect is located in 350 metres of water and will be the
first well to target the deep water plays in the Tumbes Basin. In
Suriname, Tullow is close to finalising the submission of an ESIA
with the drilling of the Goliathberg North prospect planned for the
second half of 2020.
Africa
Tullow has completed a 3,000 sq km 3D seismic survey over its
three blocks in the Comoros. The data from the survey will be
evaluated ahead of deciding next steps in this exciting frontier
region. In Côte d'Ivoire, Tullow plans to commence a 2D seismic
survey across its substantial onshore acreage position around the
end of the year, following a programme of local stakeholder
engagement and regulatory approvals. In Namibia, Tullow completed
the acquisition of a 56% operated interest in offshore Block 2813B
from Calima Energy. Prospectivity includes a Cretaceous turbidite
play which is expected to be calibrated by industry drilling in the
area next year.
Financial update
Full year free cash flow is forecast to be around $350 million,
subject to year-end working capital movements. Free cash flow
generation has been adversely affected by lower production, and by
lower oil prices for much of the second half of the year.
Despite lower than forecast free cash flow, the Group continues
to focus on debt reduction, and net debt at the end of 2019 is
expected to be around $2.8 billion (from $3.1 billion at the
beginning of the year). Gearing is expected to increase marginally
to approximately 2.0x (from 1.9x at the beginning of the year),
reflecting lower EBITDAX. The Group retains liquidity headroom and
free cash in excess of $1 billion.
Capital expenditure for the year is expected to be approximately
$540 million, including approximately $35 million for Tullow's
33.3% share of the Lake Albert Development in Uganda.
FOR FURTHER INFORMATION CONTACT:
Tullow Oil Murray Consultants
plc (Dublin)
(London) (+353 1 498
(+44 20 3249 0300)
9000) Pat Walsh
Julia Ross Joe Heron
Nicola Rogers
George Cazenove
Notes to Editors
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 80
exploration and production licences across 16 countries which are
managed as three business delivery teams: West Africa, East Africa
and New Ventures.
For further information please refer to our website at
www.tullowoil.com
Follow Tullow on:
Twitter: www.twitter.com/TullowOilplc
You Tube: www.youtube.com/TullowOilplc
Facebook: www.facebook.com/TullowOilplc
LinkedIn: www.linkedin.com/company/Tullow-Oil.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
TSTUUVBRKSAAAAA
(END) Dow Jones Newswires
November 13, 2019 02:00 ET (07:00 GMT)
Tullow Oil (LSE:TLW)
Historical Stock Chart
From Apr 2024 to May 2024
Tullow Oil (LSE:TLW)
Historical Stock Chart
From May 2023 to May 2024