Tullow Oil is a well-established and recognised oil and gas 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 approximately £750 million.
Full year results to 31 December 2021 were published on 9th March and we were delighted to have Rob Hellwig, Group Treasurer and Head of Investor Relations present and talk about the company’s prospects. A recording of the webinar is available here.
Rob started by highlighting that it was back in November 2020 when a new strategy and 10-year business plan was articulated and 2021 was the year they started to implement the plan. In terms of 2021 achievements, the balance sheet has been refinanced, operating costs and overheads have been reduced, strong production growth was delivered at Jubilee with production improving from 70k/bl to 90k/bl/day and Simba (Gabon).
For 2022 shareholders should expect investment in drilling and infrastructure in the producing areas and on high return opportunities across all the assets, a potential value realisation event in Kenya, a high impact exploration well in Guyana and near-field exploration upside. All told this should deliver approximately 6% CAGR production growth 2021-25 and at $75/bl oil the deleveraging of the balance sheet should continue such that Net Debt/EBITDA is less than 1.5x by the end of 2023. There are also a number of catalysts that will drive additional value including the exercise of the pre-emption rights over Occidental Petroleum’s assets in Ghana, which completed 2 weeks ago. It was pointed out the all the figures in the slides do not reflect the impact of the pre-emption which increases CAGR in production from 6% to 8% over the same period.
Tullow is mainly focused in Africa and Rob stated the company view that African oil and gas assets should be developed responsibly and efficiently. Tullow has a key role in this process and will help to deliver economic and social benefits in the countries where they operate. He also reiterated the commitment for Tullow to reach Net Zero (Scope 1 and 2) by 2030 and the importance of a strong health and safety culture.
Examining the financial strategy in more detail, a number of significant milestones were met in 2021 which was described as a truly transformational year. The balance sheet was…
