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Tullow Oil returns to net profit, resumes dividend

  • SOURCE: Joy | Joy FM
  • Africa-focused Tullow Oil reported its first annual net profit in five years on Wednesday and said it would resume dividends with a 4.8 cent per share payout as it sets its sights on East African projects and drilling in Guyana.

    As flagged in November, Tullow will pay out at least $100 million to shareholders from this year, while aiming to shrink its $3.1 billion debt and increase spending to $570 million.

    The largest chunk of that money will help increase output in Ghana, which sets Tullow on course to raise output to 102,000 barrels of oil equivalent per day (boed) this year from 90,000 boed.

    Tullow made a post-tax profit of $85 million on $1.9 billion in revenue last year, buoyed by higher oil prices and cost discipline.

    A $208 million payment after selling a stake in its Uganda onshore fields to Total was delayed last year because the country asked for more tax on the deal than expected.

    Tullow on Wednesday said it had now agreed on the principles of the tax arrangement. Chief Executive Officer Paul McDade told Reuters he expected to pay less than the $167 million initially asked for by the government, which will pave the way for the final go-ahead on its Ugandan project in mid-year.

    Barclays analysts said in a note they expected the tax payment to be around $85 million.

    “Placed alongside the announced dividend payment … we think (the initial tax deal in Uganda) is a positive update and shares should outperform the sector today,” JP Morgan said in a note.

    In Kenya, Tullow reiterated it saw a final investment decision by year-end.

    Milestones to pass first include commercial and financing arrangements for two pipelines planned to carry oil from the onshore fields to the Indian Ocean coast.

    In Uganda, Tullow anticipates finalising commercial and land agreements in the first half.

    In Kenya, Tullow expects commercial framework agreements from the government and deals over land acquisition for the 800 km pipeline and oilfield infrastructure in the first quarter.

    In Guyana, Tullow plans to drill the Jethro prospect in the second quarter as the first of two planned wells on the Orinduik block.

    It hedged just under 60,000 bopd for 2019 at a floor price of $56.24 per barrel and 25,000 bopd of its 2020 production $59.00 per barrel.

     

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    Joy FM

    Joy FM is a privately owned radio station in Accra, the capital of Ghana and owns https://www.myjoyonline.com/ghana-news/ .The station is owned and run by Multimedia Group Limited.
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