Tullow Oil is a well-established and recognised oil explorer and producer, operating across Africa and South America. The company is listed on the premium segment of the London Stock Exchange, is a constituent of the FTSE250 and has a market capitalisation of £750 million.
Half year results to 30 June 2021 were published on 15th September and we were delighted to have Rahul Dhir, Chief Executive Officer and Les Wood, Chief Financial Officer walk through these results and talk about the company’s prospects. A recording of the webinar is available here.
Rahul started by commenting that Tullow has made a significant turn around over the last year. The cost base has been reset, a refinancing was completed to simplify the capital structure and there is a clear strategy to focus the majority of capex on the producing West African assets which generate a lot of cash flow. The company also has additional value creating optionality through their Kenya portfolio and exploration blocks. Throughout their portfolio they are committed to responsible and safe operations.
Looking specifically at what has been delivered over the last year against the commitments made at the capital markets day, Rahul is pleased with their progress. Key is the sustainable and self-funded production, improving the operational performance in Ghana, improvements in the drilling performance (cheaper and faster), delivered a revised development plan for Kenya and there is commitment to net zero by 2030. The 2021-2025 plan has been refined and they expect to deliver good organic growth from existing assets, generate strong cash flows and reduce gearing to 1.5x by 2025.
Taking a more reflective look at where Tullow fits into the energy debate, the view is that the world needs energy from fossil fuels and will continue to do so for many years to come. The sector needs responsible operators and Tullow can, and is, filling that role. Oil and Gas companies can be an engine for economic growth in areas where Tullow operates in Africa. These areas should not be prevented from growing sustainably and with minimal environmental impact. Africa makes minimal contributions to global emissions and there is a strong case for these geographies to develop their assets. Tullow believes they have an opportunity to be a leader in Africa, creating value for host nations and the communities where they operate. A net zero commitment is a key part of…
