Tullow Oil, the independent oil and gas exploration and production group, announces its Full Year Results for the year ended 31 December 2023.
Rahul Dhir, Chief Executive Officer, Tullow Oil plc, commented: “2023 was a year of significant achievements, including start-up of Jubilee South East that delivered material production growth from our core operated field, a new revenue stream established from the sale of Ghana associated gas; and reserves growth in Gabon through licence extensions. We also generated free cash flow ahead of expectations despite a lower year-on-year realised oil price and demonstrated our ability to access long-term capital through the $400 million debt facility agreement with Glencore.
“In line with our strategy, we are continuing to focus relentlessly on operational excellence, capital efficiency and investments to drive growth. This strategy is delivering material cashflow generation and we are on track to deliver our target of c.$800 million free cash flow over the 2023 to 2025 period and optimise our capital structure.
“Tullow has a strong and unique foundation to create material value for our investors, host nations and stakeholders and we look to the future with confidence.”
2023 FULL YEAR RESULTS OVERVIEW
Group working interest oil and gas production 62.7 kboepd; (2022: 61.1 kboepd).
Revenue of $1,634 million (2022: $1,783 million), a year-on-year reduction driven by c.12% lower realised post-hedge oil price of $77.5/bbl (2022: $88.0/bbl).
Adjusted EBITDAX of $1,151 million (2022: $1,469 million); gross profit of $765 million (2022: $1,086 million); loss after tax of $110 million (2022: profit after tax of $49 million) driven by impairments and write-offs totalling $435 million (2022: $391 million).
Free cash flow of $170 million (2022: $267 million) ahead of guidance despite increased capital expenditure of $380 million (2022: $354 million) and decommissioning spend of $67 million (2022: $72 million).
Net debt at year-end reduced to $1,608 million (2022: $1,864 million); cash gearing of net debt to adjusted EBITDAX of 1.4 times (2022: 1.3 times); liquidity headroom of $1,000 million (2022: $1,055 million).
Material step in refinancing strategy with new $400 million five-year Glencore debt facility, with proceeds available for liability management of the senior notes maturing in March 2025.
Completed major infrastructure project with Jubilee South East brought onstream, marking a material step up in production at Jubilee which surpassed 100,000 bopd gross.
Strong operating, drilling and completion performance, with seven Jubilee wells brought onstream and facilities uptime of c.96% in Ghana.
c.$30 million revenue from commercialisation of Jubilee associated gas through Interim Gas Sales Agreement.
Increased Gabon reserves and centred portfolio around Tchatamba production hub through swap agreement and licence extensions.
Sale and exit of Guyana business, in line with strategy to focus portfolio on high-return assets in Africa.
2024 GUIDANCE
Production growth in 2024 with group working interest production expected to average between 62 to 68 kboepd, including c.7 kboepd of gas.
2024 capital expenditure of c.$250 million, comprising c.$160 million in Ghana, c.$60 milllion on the non-operated portfolio, c.$10 million in Kenya and c.$20 on exploration. Decommissioning spend of c.$50 million for UK and Mauritania; c.$20 million provisioning for Ghana and Gabon.
Cash taxes expected to be c.$350 million at $80/bbl, with payments weighted to the first half of the year.
Forecast free cash flow of $200-300 million at $80/bbl, with the range largely driven by timing of revenue receipts for 18 to 19 cargoes lifted in Ghana during the year.
Year-end net debt expected to be less than $1.4 billion; cash gearing of net debt to EBITDAX expected to be c.1x at $80/bbl.
On track to deliver targeted c.$800 million free cash flow over 2023 to 2025 period, with over $600 million free cash flow expected to be generated over 2024 to 2025 at $80/bbl.
Production and reserves
In 2023, full year working interest production averaged 62.7 kboepd, including 6.9 kboepd of gas. Group working interest production is expected to increase year-on-year and the company’s guidance range for 2024 is 62-68 kboepd.
At the end of 2023, audited 2P reserves were 212 mmboe (2022: 229 mmboe). During the year, 23 mmboe of 2P reserves were produced with a replacement ratio of 26%. Additions were primarily from the extension of production licences in Gabon and the maturation of several infill wells, both in Gabon and the Jubilee area. These additions were partly offset by reductions in TEN 2P reserves, mainly driven by a reduced near-term development programme in light of the ongoing delays to gain Government approval for the TEN amended PoD. Around 30 mmboe of net gas resources remain classified as 2C pending the approval of the TEN amended PoD and Gas Sales Agreement. Commercialisation of these gas resources would place TEN on a much firmer economic footing and support the maturation of several identified projects.
