Tullow Oil plc (Tullow), the independent oil and gas exploration and production group, has announced a profit after tax of $30 million in its half-year results for the six months ended 30 June 2016.
• 1H profit after tax of $30 million. Lower revenues on prior year as a result of lower commodity prices and reduced Jubilee production, which is the subject of an insurance claim, were partially offset by significantly lower costs and write-offs.
• Net debt at 30 June 2016 of $4.7 billion with facility headroom and free cash of $1.0 billion. Additional headroom of $300m added through a successful Convertible Bond issue on 6 July, further diversifying sources of debt.
• Mark-to-market value of oil hedges of over $300 million at 30 June 2016; 38,500 bopd of second half 2016 oil production hedged at average floor price of $74/barrel.
• TEN Project on schedule and on budget to deliver first oil in early August. TEN will increase Tullow’s group net production by c. 60% when it reaches facility capacity around the end of 2016, enabling Tullow to deleverage organically.
• The Jubilee field’s new operating procedures are working well with second half 2016 gross production expected to average 85,000 bopd. A project to spread moor the FPSO for the long term has commenced and insurers have been notified.
• East Africa upstream and pipeline projects in Kenya and Uganda moving towards FEED. Kenya Early Oil Pilot Scheme, with potential to deliver 2,000 bopd by the second half of 2017, being assessed with the Government of Kenya.
• Successful Kenya appraisal programme underpins estimated gross recoverable resource of up to 750mmbo. Exploration and appraisal programme to restart in the South Lokichar Basin in Q4 2016.
• New licences signed in H1 2016 in Zambia and Guyana; pre-drilling and scoping activities under evaluation in Suriname, Guyana, Jamaica, Uruguay and Namibia.
Commenting on the results on Wednesday, Tullow CEO Aidan Heavey: “The start of production from the TEN field in early August will be transformational for the Group allowing us to significantly increase our net production and begin the process of deleveraging our balance sheet.
This project has remained on schedule and on budget since the day the Plan of Development was signed and demonstrates our ability to deliver complex projects of this nature. The benefits of last year’s cost-cutting programme are evident in the financial results, the significant TEN capital expenditure is largely behind us and we have also made good progress on the Jubilee Turret Project.
Tullow is therefore well placed to move forward with a restructured and more efficient business that can deliver growth from its portfolio of high quality, low cost producing, development and exploration assets.”