Tullow oil’s Jubilee field to close temporarily later this year

Financial discipline and efficient capital allocation a ‘key focus’, says chief executive

One of Tullow Oil’s drilling blocks at the Lokichar basin in Kenya. Photograph: Getty Images.

One of Tullow Oil’s drilling blocks at the Lokichar basin in Kenya. Photograph: Getty Images.

 

Oil exploration company Tullow Oil expects to generate $0.6 billion (€0.52 billion) of pre-tax operating cash flow for the first half of 2017, higher than the first half of 2016 as a result of insurance proceeds and increased contributions from its Ghanaian operation, Jubilee.

In a trading update issued Wednesday, the group said that the Jubilee operation, one of its key oil fields, will shut down for between five and eight weeks in late 2017 for operational reasons. Full-year net production guidance from that field is expected to stay at about 36,000 barrels of oil per day.

Net debt at the end of the first half of 2017 stood at $3.8 billion for the exploration company whose Ghanaian operations were below forecast. However, less significant oil fields in Equatorial Guinea and Gabon produced more bopd than were forecast. On the whole, the group produced 87,000 bopd in the first six half of 2017, 800 barrels below forecast.

Share price performance

Capital expenditure guidance at the company has been revised downwards to $0.4 billion from $0.5 billion as a result of lower forecast expenditure across the company’s portfolio.

In a client note, analysts at Davy Stockbrokers said that the trading statement “points to a company working hard on financial discipline, which should improve Tullow’s share price performance”.

Paul McDade, chief executive of Tullow Oil, said: “Since I became CEO in April, I have reviewed our medium-term plans and remain satisfied that we are making the right investment decisions with regard to our producing, development and exploration portfolio.

“Financial discipline and efficient capital allocation will be a key focus of my tenure as CEO as we seek to deleverage the Company and return to growth even at low oil prices.”