Tullow expects stronger cashflow as oil price spikes

Exploration group has a market capitalisation of $1bn

 Storage tanks at Tullow Oil’s Ngamia 8 drilling site in Lokichar, Turkana County, Kenya. Photograph: Reuters/Baz Ratner/File Photo

Storage tanks at Tullow Oil’s Ngamia 8 drilling site in Lokichar, Turkana County, Kenya. Photograph: Reuters/Baz Ratner/File Photo

 

West Africa-focused Tullow Oil expects its 2021 free cashflow to come in higher than previously forecast at $250 million (€221m) and expects this year’s cash flow to come in at $100 million at an oil price of $75 a barrel, it said on Wednesday.

Tullow, with a market capitalisation of around $1 billion as of Tuesday, is focusing on reducing its $2.1 billion debt pile and has hedged 50-75 per cent of its output of around 60,000 barrels of oil equivalent per day between $51 and $78 a barrel to 2024. The hedging cost is between $1.60 and $2 per barrel, it said.

Benchmark crude oil futures are trading near $90 a barrel, with much of last year’s third quarter above $80.

Tullow had said in November it saw its 2021 free cashflow at $100 million. “(2021) free cash flow is expected to be c.$250 million, ahead of guidance, driven by continued focus on costs, supportive oil prices in the latter parts of 2021 and favourable working capital movements,” Tullow said in a trading statement.

It is due to report full-year results on March 9th.

Tullow is seeking new investors for its yet to be developed projects in Guyana and Kenya, having submitted a revamped $3.4 billion development plan for some of its onshore Kenyan oilfields last month, it said. – Reuters