Prospect & Investment Decision Evaluation

Prospect & Investment Decision Evaluation

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London — Independent oil explorer Tullow Oil is confident that its oil production will grow by 10% this year, boosted by a successful drilling program at its Ghanaian assets, it said Wednesday.

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2019 looks on course for being a good year for the independent oil explorer amid a much improved balance sheet after a few years of financial worries.

"Tullow is well-placed to deliver on its growth ambitions. In 2019, we will increase oil production in West Africa, target final investment decisions in East Africa and drill the first wells in an exciting exploration campaign in Guyana," Tullow CEO Paul McDade said.

Crude output in 2019 will average 97,000 b/d, from 88,200 b/d last year. Tullow is on course to drill and complete seven new wells across the TEN and Jubilee fields, allowing gross oil production from Ghana to rise to approximately 180,000 b/d.

Gross output from the flagship Jubilee field will rise to 96,000 b/d from 78,000 b/d last year. Output from this field fell slightly in December due to minor operational issues, which have now been resolved, it said.

The TEN fields will see significant output growth in 2019, rising to 83,000 b/d from 64,500 b/d in 2018, Tullow said. Gas production from the UK in 2018 was 1,700 boe/d, with production ceasing as planned in September 2018.


Tullow reiterated that the final investment decision at its projects in Uganda and Kenya will be achieved in the first and second halves of 2019 respectively.

Tullow is targeting first oil in Kenya in 2022 but noted that several key milestones like land acquisition, commercial frameworks and contract awards will need to be achieved in 2019.

The farmdown of Tullow's assets in Uganda to Total for a total of $900 million continued to be delayed and is now expected to be complete in the first half of the year.

"Negotiations with the Government are ongoing. The Operators of the Uganda development continue to target FID in the first half of this year once agreements with the Governments of Uganda and Tanzania have been completed," Tullow said.

But the delay in the farmdown of its Ugandan assets to Total meant Tullow missed its cash flow and net debt targets.

Tullow said it expects to deliver a free cash flow of $410 million at the end of 2018 from a previous guidance of $700 million.

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Net debt was reduced from $3.5 billion at the beginning of the year to around $3.1 billion at the end of 2018. It had previously forecast a net debt of $2.9 billion at the end of last year.

Tullow Oil will return to paying dividends this year amid rising cash flow and oil production. Late last year, it said it expected to pay an annual dividend of no less than $100 million.


The success of recent oil discoveries in Guyana means Tullow will focus its exploration drilling program on this region.

It will drill the Jethro prospect in the second quarter of 2019 as the first of two planned wells on the Orinduik block. "The Carapa prospect will be tested on the Kanuku license in the third quarter of 2019," Tullow said.

The Orinduik block offshore Guyana could hold almost 3 billion barrels of oil equivalent of recoverable oil and gas, raising the stakes for closely watched wildcat drilling planned for this year.

The block lies adjacent to ExxonMobil's Stabroek license where the oil major has already announced a string of large oil finds.

--Eklavya Gupte, This email address is being protected from spambots. You need JavaScript enabled to view it.

--Edited by Jonathan Fox, This email address is being protected from spambots. You need JavaScript enabled to view it.

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