REG - Tullow Oil PLC - JULY TRADING STATEMENT & OPERATIONAL UPDATE

Tullow OilAnnouncement

12/07/2023 07:00

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RNS Number : 7072F  Tullow Oil PLC  12 July 2023

TULLOW OIL PLC
July Trading Statement & Operational Update

Jubilee South East due onstream imminently, driving a positive step change in
production and free cash flow generation

$266 million gross debt reduction in 1H through bond buy back and amortisation

12 JULY 2023 - Tullow issues the following statement in advance of the Group's
2023 Half Year Results scheduled for 13 September 2023. The information
contained herein has not been audited and may be subject to further review and
amendment.

Rahul Dhir, Chief Executive Officer of Tullow, commented today:

"This is an exciting time for Tullow and a pivotal moment in 2023 as we are on
the cusp of the start-up of Jubilee South East, a project that demonstrates
our operational capability and continued investment in Ghana's world class
Jubilee field. Gross production from the field is expected to exceed 100,000
bopd which will mark the outset of increased cash flow generation to
materially deleverage our business.

"Our tender offer for the 2025 Notes marked an important step in addressing
our debt maturities and reiterates our confidence in our business plan and
outlook. It has also accelerated our deleveraging trajectory and we expect to
continue this positive momentum in the second half of 2023 and beyond."

Operations update

·      First half 2023 Group production averaged c.53 kboepd. Net
production in the first half of the year from the Jubilee and TEN fields
averaged c.28 kbopd and c.11 kbopd, respectively, and net production from
Gabon and Côte d'Ivoire averaged c.14 kboepd. Full year group guidance
remains unchanged at 58-64 kboepd.

·      Jubilee South East (JSE) is due onstream imminently. Three JSE
producers and one JSE water injector are expected onstream this year to help
sustain gross Jubilee production over 100 kbopd. Tullow and its Partners plan
to maintain this increased level of production at Jubilee over the next few
years through an ongoing infill drilling programme. Future drilling locations
have been identified to further extend this plateau and realise the full
potential of the significant Jubilee resource base.

·      Planned TEN shutdown is underway, seeking to improve gas handling
and support reduced flaring. The amended TEN Plan of Development is being
finalised following good engagement with the Government of Ghana.

·      Production efficiency across the TEN and Jubilee FPSOs has been
high, averaging 97% uptime in the first half of 2023.

·      Commercial terms for the long-term gas sales agreement are under
discussion with the Government of Ghana. The agreement will not only enhance
energy security in Ghana but also add another revenue stream for Tullow and
result in the addition of c.150-200 bcf of net gas reserves on TEN.

·      Approval has been received from the Government of Gabon for the
cashless asset swap agreement announced in April. The asset swap with Perenco
optimises Tullow's equity ownership and places the Tchatamba facilities as a
core production hub for the Group.

Financial update

·      Total revenue in the first half, including the cost of hedging,
of c.$0.8 billion at a realised average oil price of c.$81/bbl before hedging
and c.$74/bbl after hedging.

·      Capital expenditure of c.$200 million in the first half; full
year capital expenditure guidance remains c.$400 million.

·      Decommissioning expenditure of c.$40 million. Full year guidance
is reduced to c.$70 million due to deferrals into 2024. As previously
announced, a further c.$20 million will be paid into escrow in 2023 for future
decommissioning obligations in Ghana and Gabon.

·      Free cash flow of negative c.$100 million in the first half, in
line with expectations. Significant reversal expected in the second half of
the year, with c.$200 million free cash flow generated at $80/bbl. Full year
free cash flow guidance remains unchanged at c.$100 million at $80/bbl.

·      Purchase of c.$166 million of the 2025 Notes for c.$100 million
cash consideration announced in June, delivering value accretion of c.$86
million from a combination of a c.$66 million net debt reduction and coupon
savings to maturity of c.$20 million.

·      Gross debt reduced by c.$266 million in the first half of 2023
through a combination of the 2025 Notes purchase and annual amortisation of
the 2026 Notes. Net debt at the end of the first half of 2023 was c.$1.9
billion and is forecast to be c.$1.7 billion at year-end.

·      Commodity hedging policy reinstated to ensure 60% downside
protection for the first year ahead, and 30% for the second year, whilst
maintaining full upside exposure for no less than 60%, through appropriate
instrument selection.

 Oil hedge portfolio as of 30 June 2023      2023     2024
 Hedged volume - protected downside (kbopd)  34.5     11.3
 Hedged volume - capped upside (kbopd)       28.0     11.3
 Weighted average floor protected            $56/bbl  $55/bbl
 Weighted average sold call                  $75/bbl  $75/bbl

Governance update

·      Rebecca Wiles was appointed as a non-executive director of Tullow
in June 2023. She brings deep technical and geoscience expertise alongside
emerging markets experience in Africa to the Tullow Board. Following the
departure of Mike Daly at the end of the 2023 AGM, Rebecca replaces this
critical skill set on the Board.

·      Over one million shares purchased by Tullow Directors
demonstrates the Board's confidence in the Group's strategy. A summary of the
purchases is shown below.

 Member                                     Aggregated number of shares purchased in June 2023
 Phuthuma Nhleko, Chairman                  142,500
 Rahul Dhir, Chief Executive Officer        360,900
 Richard Miller, Chief Financial Officer    35,500
 Roald Goethe, Non-Executive Director       750,000
 Genevieve Sangudi, Non-Executive Director  100,000
 Sheila Khama, Non-Executive Director       32,900

 

Contacts
 Tullow Oil plc       Camarco

 (London)             (London)

 (+44 20 3249 9000)   (+44 20 3781 9244)

 Nicola Rogers        Billy Clegg

 Matthew Evans        Georgia Edmonds

                      Rebecca Waterworth

 

Notes to editors

Tullow is an independent oil & gas, exploration and production group which
is quoted on the London and Ghanaian stock exchanges (symbol: TLW). The Group
has interests in over 30 licences across eight countries. In March 2021,
Tullow committed to becoming Net Zero on its Scope 1 and 2 emissions by 2030.
For further information, please refer to our website at www.tullowoil.com
(http://www.tullowoil.com/) .

Follow Tullow on:

Twitter: www.twitter.com/TullowOilplc (http://www.twitter.com/TullowOilplc)

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Facebook: www.facebook.com/TullowOilplc (http://www.facebook.com/TullowOilplc)

LinkedIn: www.linkedin.com/company/Tullow-Oil
(http://www.linkedin.com/company/Tullow-Oil)

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