Tullow Oil, the London-listed oil and gas company, has said it is entering a phase of cash generation as it ramps up production from its offshore Ghana fields. The company has also reduced its debt and spending and sought opportunities to grow its business.
Tullow Oil operates two floating production, storage, and offloading (FPSO) vessels in Ghana: the Jubilee FPSO and the TEN FPSO. The Jubilee field, which started production in 2010, is one of the largest oil discoveries in West Africa. The TEN project, which comprises the Tweneboa, Enyenra and Ntomme fields, began production in 2016.
In July, Tullow Oil completed the Jubilee South East (JSE) project, which added three new production wells and two water injection wells to the Jubilee field. This increased the field’s output to around 108,000 barrels per day (bpd) gross, up from 72,400 bpd in the year’s first half. Tullow Oil expects the Jubilee field to average 90,000 bpd gross for the full year, of which 35,000 bpd are net to the company.
The TEN project, however, has faced some challenges because of reservoir complexity and operational issues. The field’s production was 20,000 bpd gross in the first half of the year, of which 8,600 bpd were net to Tullow Oil. The company is working on various options to improve the performance of the TEN project, including gas monetization and facility optimization.
Tullow Oil’s CEO, Rahul Dhir said that the company had focused on capital discipline, operational performance, and investment in its assets for the last two and a half years. “We now switch to harvesting mode as our business is set to generate c. $800 million of free cash flow between 2023 and 2025,” he said.
The company plans to use its cash flow to further reduce its debt, which stood at $1.9 billion at the end of June. It also aims to create a sustainable capital structure and grow its business to create value for its investors, host nations, and employees.
Tullow Oil’s CFO, Richard Miller, said the company aimed to be a low-debt business by 2025. He also said the company was open to inorganic growth opportunities, but only if they competed with its organic options.
Tullow Oil has continued to streamline its portfolio by selling its stake in Guyana to Eco Atlantic. It also holds a 100% stake in Kenya’s Lokichar Basin, seeking partners and government approval for a development plan.
Tullow Oil is one of several oil companies operating in Ghana, which has become a major oil producer in Africa since the discovery of Jubilee. Other operators include Eni, Kosmos Energy, and Aker Energy. Ghana’s oil sector has contributed to its economic growth and development but also faces challenges such as revenue management, environmental impacts, and local content requirements.
