Revenues dropped to $1.27 billion, but net debt further reduced by cash flow mainly from Ghana assets

London-listed independent Tullow Oil reported lower revenues in 2021 due to oil hedges and asset sales that resulted in lower production.

Revenues stood at $1.27 billion compared to $1.39 billion in 2020, based on production volumes of 59,200 barrels of oil equivalent per day as against 74,900 a year earlier.

Tullow said its realised oil price after hedging for 2021 was $62.7 per barrel and before hedging was $70.3, compared to $50.9 and $42.9 respectively for 2020.

“There has been a strong recovery in oil markets which has led to higher realised prices, partially offset by hedge losses, decreasing total revenue by $153 million,” added the company in a statement.

Production dropped mainly due to the sale of Tullow’s interests in Equatorial Guinea and the Dussafu Marine Permit in Gabon last year, plus lower than expected production from the Twenboa-Enyenra-Ntomme (TEN) fields in Ghana.

Despite this revenue drop, Tullow has managed to further reduce its debt to $2.13 billion, while focused on optimising oil production and commercialising gas resources at its Jubilee and TEN assets offshore Ghana.

Its net loss for the year was $81 million compared to a $1.22 billion loss in 2020.

Chief executive Rahul Dhir said: “Following a transformational 2021, in which Tullow successfully refinanced its balance sheet, drilled highly productive wells in Ghana and demonstrated operational excellence and financial discipline across the group, we are now concentrating on the successful delivery of our long-term business plan.

“This year… will see a great deal of activity at our flagship Jubilee field with investment in new infrastructure and new wells to grow production in the near term and we are taking on the operation and maintenance of the floating production, storage and offloading vessel.”

At TEN, Tullow aims to drill two strategic wells that will help define its future plans for the fields and it also aims to continue to build production in Gabon.

“I also expect us to make tangible progress towards our ambitious target of achieving Net Zero by 2030,” said Dhir, highlighting “additional opportunities to deliver value across our portfolio, including gas commercialisation in Ghana, our revised Kenya development project and an exciting well in a proven play in Guyana”.

Production for 2022 is expected to range between 55,000 and 61,000 boepd, supplemented by a further 5000 boepd when its pre-emption on the sale of Occidental Petroleum’s interest in Ghana to Kosmos Energy is completed.

Full year underlying operating cash flow guidance remains about $750 million, assuming an oil price of $75 for the rest of the year, while full-year free cash flow guidance remains at about $100 million.

Tullow added that year-to-date cash flow was positively impacted by oil prices, largely offsetting the one-off impact of a $76 million payment to HiTec Vision related to the purchase of Spring Energy in 2013, following an arbitral decision in HiTec’s favour.

A cash flow bonus was secured in February with receipt of a $75 million contingent payment after TotalEnergies took a final investment decision on its Ugandan oil project.

Tullow expects to spend about $350 million this year — $270 million in Ghana, $30 million on its non-operated portfolio, $5 million in Kenya, and $45 million on exploration.

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