Tullow Oil, a London-listed oil and gas exploration and production company, narrowed its net loss for the year, posting a loss after tax of $189 million, compared to a loss after tax of $597 million in 2016.
Tullow also posted an operating profit of $22 million, compared to a loss of $755 million in 2016. Revenue grew to more than $1,7 billion, up from $1,27 billion.
Tullow’s total average working interest production in 2017 was 94,700 boepd, most of which – 89,100 bopd- came from its Ghana offshore oil fields – Jubilee and TEN.
Paul McDade, CEO said: “I am pleased to report that Tullow made excellent progress in 2017 as demonstrated by our substantial free cash flow generation and significantly reduced gearing. Strong production and disciplined cost management has allowed us to continue to both reduce debt and invest in our high-return production assets in Ghana.
“The assessment of the results from our appraisal campaign in Kenya also fully supports progress towards a major development of the South Lokichar Basin. As we continue to retain a keen focus on the financial discipline that has served us so well, we are now also looking to grow the value of our business both through exploration, following a full re-set of the portfolio, and through other opportunities that the recovery in the sector will present.”
The company will this month start what it says is an incremental drilling program. Tullow has recently hired the Maersk Venturer rig which is expected to start drilling later this month.
The rig will be used across the TEN and Jubilee fields and has been contracted for up to four years with early termination provisions.
The first well planned is an Ntomme production well in the TEN fields followed by a Jubilee production well located in the north-eastern area of the field. Work is ongoing to finalise the sequence of further wells to optimize output from both the Jubilee and TEN fields.
Tullow also said it continued to evaluate the business case for contracting a second rig that would allow the acceleration of drilling across both fields.
“This additional well capacity combined with current strong production from both Jubilee and TEN fields will maximize and sustain production in the coming years,” Tullow said.
High-impact exploration ahead
Presenting its results, the company also stressed it had reset its exploration portfolio through disposals, farm-downs and the addition of significant new positions in Côte d’Ivoire and Peru.
“Multiple high impact exploration campaigns planned over next three years, starting with the high-impact Cormorant well in Namibia in H2 2018,” Tullow said.
Tullow plans to start drilling at the Cormoran in the second half of 2018. The well will target light oil and there are a number of similarly-sized follow-up prospects in close proximity
Apart from its offshore operations, Tullow is working towards making final investment decisions on two onshore projects in Uganda and Kenya in 2018 and 2019, respectively.
Mark MacFarlane, Executive Vice President for East Africa, commented today:
“The exploration and appraisal campaign in Kenya has confirmed the presence of substantial oil resources in the South Lokichar Basin. After over six years of hard work, we can now move forward to commercialising these low cost resources through a phased development of the basin involving a central processing facility and an export pipeline to the Kenyan coast.
“In 2018, we will focus on taking the project towards FID in 2019 with a prudent and flexible plan of execution that can take advantage of low oil services costs and deliver first oil and cash flow as soon as possible. With good progress being made in Uganda towards FID, East Africa is on the verge of becoming a major oil exporting region.”