Tullow Oil, a UK-based oil and gas exploration company, has revealed its plans to focus more on its African assets in its annual report for 2020, which was published on March 10, 2021.
The report shows that Tullow Oil faced a challenging year in 2020, due to the global effects of the COVID-19 pandemic and the low oil prices. The company reported a net loss of $1.22 billion, compared to a net profit of $85 million in 2019. The loss was mainly caused by the impairment charges and exploration write-offs related to its assets in Africa and South America.
The report also shows that Tullow Oil managed to reduce its net debt by $432 million to $2.4 billion, and to generate $726 million in free cash flow, exceeding its target of $500 million. The company achieved this by implementing a comprehensive restructuring and cost-cutting program, which included reducing its workforce by 35%, selling its assets in Uganda and Equatorial Guinea, and renegotiating its debt facilities.
The report further shows that Tullow Oil produced an average of 74,900 barrels of oil per day (bopd) in 2020, slightly below its guidance of 75,000 bopd. The company’s production was affected by the operational issues and lower investment in its flagship assets in Ghana, namely the Jubilee and TEN fields, which account for more than 90% of its output.
The report outlines the company’s strategy and outlook for 2021 and beyond, which is based on three pillars: focus, delivery and growth. The company said that it will focus on its core assets in West and East Africa, where it has a competitive advantage and a proven track record. The company said that it will deliver on its operational and financial targets, by optimizing its production, reducing its costs, managing its debt and maintaining its liquidity. The company said that it will pursue growth opportunities, by investing in its existing assets, exploring new prospects and seeking partnerships and acquisitions.
The report highlights the company’s plans and prospects for its African operations, which include:
– Ghana: The company said that it will invest $2.7 billion over the next 10 years to maintain and increase its production from the Jubilee and TEN fields, which have a combined resource base of 1.2 billion barrels of oil equivalent (boe). The company said that it will also drill four exploration wells in the Orinduik and Kanuku blocks offshore Guyana, where it has a 60% stake and a 37.5% stake respectively. The company said that it expects to find up to 1.4 billion boe in these blocks, which are adjacent to the prolific Stabroek block, where ExxonMobil has made 18 discoveries totaling 9 billion boe.
– Kenya: The company said that it will work with the Kenyan government and its joint venture partners, Total and Africa Oil, to finalize the development plan and the commercial framework for the South Lokichar project, which has a resource base of 560 million boe. The company said that it aims to reach a final investment decision (FID) by the end of 2021, and to start production by 2025. The company said that it will also explore the potential of the Kerio Valley basin, where it has identified several prospects with a combined resource potential of 1.2 billion boe.
– Uganda: The company said that it completed the sale of its stake in the Lake Albert project to Total for $575 million in April 2020, and that it expects to receive a further $75 million once the project reaches FID. The company said that it will use the proceeds to reduce its debt and to fund its growth projects in Ghana and Kenya.
– Namibia: The company said that it will drill an exploration well in the Nama block offshore Namibia, where it has a 35% stake, in the second half of 2021. The company said that it expects to find up to 671 million boe in this block, which is located in a frontier basin with multiple play types and analogues to the discoveries in Angola and Brazil.
The report also Indicates the company’s commitment to environmental, social and governance (ESG) issues, such as reducing its carbon footprint, enhancing its safety performance, supporting its host communities and complying with the best practices and standards.
The report shows that Tullow Oil is confident in its ability to overcome the challenges and to capitalize on the opportunities in the oil and gas sector, especially in Africa, where it has a strong presence and expertise. The company believes that Africa has a huge potential for oil and gas exploration and production, and that it can play a key role in meeting the growing global energy demand and in supporting the economic development and social welfare of the continent.
Source: Oil Review Africa
