Africa Oil & Gas: Tullow Oil announces 2018 half year results

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Tullow Oil has announced its half year results for the six months ended 30 June 2018.

  • West African production delivers $0.9bn revenue; $0.5bn gross profit; $0.4bn free cash flow
  • Good progress towards FIDs in East Africa; Namibia well to start multi-well exploration campaign
  • Aidan Heavey steps down as Chairman and retires 32 years after founding Tullow Oil

Commenting today, Paul McDade, Chief Executive Officer, said:

“Today’s results are further evidence of the progress that Tullow has made in the first half of 2018. With this firm financial foundation, we can concentrate on growth across our three core businesses. Over the next two years, we will increase production from our current assets in West Africa, progress two large onshore developments in East Africa and step up our search for material new oil fields in Africa and South America through a multi-year exploration campaign which will initially focus on Namibia and Guyana. There is much to look forward to for Tullow’s shareholders, host countries and staff.”

Paul McDade also paid a personal tribute to Aidan Heavey:

‘Aidan has dedicated his career to the African Oil & Gas industry. He founded Tullow 32 years ago as a small gas producer in Senegal and since then Tullow has had operations in 45 countries around the world including 20 countries in Africa. He has been a pioneer and an inspiration across Africa for decades, especially in Ghana, Uganda and Kenya. Aidan has also been a mentor to me for many years and I could not have wished for a better Chairman in my first years as CEO. Everyone at Tullow will miss Aidan and wishes him and his family all the very best for the future.’

2018 Half Year Results Summary

  • Revenue of $905 million(1); gross profit of $521 million; post tax profit of $55 million; free cash flow of $401 million
  • Net debt and gearing reduced to $3.1 billion and 2.0x; debt maturities extended with issue of $800 million of senior notes; facility headroom and free cash now $1.2 billion
  • Three-year cost reduction programme delivers $708 million of savings versus original target of $500 million
  • West Africa first half 2018 working interest oil production averaged 88,200 bopd(2); 2018 full year oil production guidance upgraded from 82-90,000 bopd to 86-92,000 bopd
  • First incremental production from Ghana drilling programme expected in August; second rig due to start drilling October 2018
  • Kenya Early Oil Pilot Scheme and oil trucking started June 2018; phased development project on track for sanction late 2019
  • Uganda deal completion expected in coming months; Upstream and pipeline FEED and upstream ESIAs have been completed; contract awards under evaluation and overall project sanction expected around the end of 2018
  • High-impact exploration campaign starts with Cormorant well in Namibia in September 2018; investing up to $150 million per year in exploration and drilling three to five high impact frontier wells annually
  • 2018 capex forecast remains $460 million, includes second rig in Ghana
  • Unsuccessful litigation in the English Commercial Court vs Seadrill and in arbitration with Kosmos re: West Leo rig
  • Dorothy Thompson appointed Chair of Tullow with effect from 20 July 2018; Aidan Heavey has stepped down from the Board and retired from Tullow

Financial Overview

Photo - see caption

(1) Revenue does not include proceeds for Tullow’s corporate Business Interruption insurance of $129 million (1H 2017: $54 million)

(2) includes 11,900 bopd of production-equivalent insurance payments

Click here for full announcement

Source: Tullow Oil

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