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Highlights
- Production Consistency: Group production remains in line with expectations, averaging 62 kboepd year-to-date.
- Ghana Operations: Jubilee production underperformed due to well issues and downtime, but mitigation efforts are underway.
- Revised Cash Flow Guidance: Free cash flow now expected to range between $150-200 million, revised from $200-300 million.
Tullow Oil plc (LSE:TLW) has issued an operational update and revised its 2024 full-year guidance, providing insight into the company’s performance and expectations for the remainder of the year. The company has confirmed that its production has largely met previous expectations, but it has revised its free cash flow forecast due to a range of factors, including timing of payments and outstanding gas payments from the Government of Ghana.
Operational Performance: Production in Line with Expectations
Tullow’s group production averaged approximately 62 thousand barrels of oil equivalent per day (kboepd) year-to-date, in line with the company’s guidance. This includes 6.5 kboepd of gas production, reflecting the company’s diversified production base.
Ghana Operations: Mixed Performance at Jubilee and TEN
In Ghana, Tullow’s Jubilee oil production averaged about 89 thousand barrels per day (kbopd) to the end of October, with the company’s net share at approximately 34.5 kbopd. This was below expectations due to a combination of factors, including underperformance of the J69-P well, unplanned downtime at the Ghana National Gas Company (GNGC) onshore gas processing plant, and periods of reduced water injection due to power outages. However, Tullow has responded by increasing water injection capacity to approximately 300 barrels per day (bwpd), and gas offtake is currently around 100 million standard cubic feet per day (mmscfpd). The company anticipates that these measures, along with further production optimization, will mitigate the declines seen in the second half of 2024.
Meanwhile, production from the TEN fields has remained consistent, averaging about 19 kbopd (with a net share of 10.5 kbopd) through the end of October, which exceeded expectations. The Enyenra and Ntomme wells have responded positively to both injection and production optimization efforts. Furthermore, uptime for the Floating Production Storage and Offloading (FPSO) units at both the Jubilee and TEN fields has been high, averaging 98% year-to-date.
Looking ahead, Tullow plans to begin a 4D seismic programme in Ghana in January 2025, which will provide additional data to optimize future drilling locations.
Gabon and Côte d'Ivoire: Steady Non-Operated Production
In Gabon and Côte d'Ivoire, Tullow’s non-operated production is on track to average around 10.5 kbopd net in 2024, in line with expectations. The Simba field in Gabon, which had been shut down in March, resumed production in August. Additionally, a discovery was made at the Simba field on the Sarafina infrastructure-led exploration well, and work is ongoing to assess the commercial viability of the find.
Revised 2024 Guidance: Free Cash Flow and Other Key Metrics
Tullow has reiterated its full-year production guidance for 2024 at approximately 62 kboepd, consistent with previous projections. The company’s capital expenditure (capex) and decommissioning spend guidance remain unchanged at $230 million and $70 million, respectively.
However, Tullow has revised its free cash flow guidance downward, now expecting a range of $150-200 million, compared to the earlier forecast of $200-300 million. The adjustment is due to several factors, including the timing of payments, such as the incremental Jubilee lifting, now expected to occur in early January 2025, and overdue gas payments from the Government of Ghana, which currently total approximately $40 million.
The company expects year-end net debt to be around $1.4 billion, in line with earlier forecasts.
