‘Solid’ results for Tullow in third quarter despite volatile oil market

Tullow Oil said it delivered "solid results" in the third quarter of the year despite ongoing volatility in oil prices. The exploration group said it was focused on "delivering growth and returns" for shareholders.

It said all its fields were producing in line with expectations, with full-year oil production expected to average between 87,000 and 91,000 barrels of oil per day, narrowing guidance. Gas production is to be an average of around 2,300 barrels of oil equivalent for the full year.

Tullow predicted full-year free cash flow of around $700 million (€619m). That includes the $200 million proceeds of its Uganda farm-down, which is expected to close at the end of 2018, and $200 million in exceptional payments due to the Seadrill litigation. Earlier this year Tullow Oil was ordered in court to make a payment to Seadrill over an early rig termination case in Ghana.

Net debt is expected to fall to $2.8 billion by the year’s end, down from $3.5 billion at the start of 2018.

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Looking at its assets, Tullow said four new infill wells in Ghana are expected to be on line by early next year. That addition would boost gross production to around 180,000 bopd. Meanwhile, a new production well is expected to be finished before the end of 2018 at Tullow’s interest in the Jubilee field.

Drilling programme

In 2019, Tullow's operations in Guyana will be the main focus for its exploration drilling programme. The company has identified a number of prospects across both the Orinduik and Kanuku licences.

"We are generating high levels of free cash flow from our west African assets, making good progress towards project sanctions in east Africa, and are finalising our 2019 exploration programme which we expect to include high-impact wells in Guyana," said Tullow chief executive Paul McDade.

“Having taken the time to lay strong foundations for our business, embed a financially-disciplined culture across the group and repair our balance sheet, we are now focused on delivering growth and returns to our shareholders.”

Shares in Tullow strengthened on the release of the update.