10th Mar 2021 11:16
(Alliance News) - Tullow Oil PLC on Wednesday reported its 2020 results were in line with its expectations despite difficulties caused by the Covid-19 pandemic.
The South America and Africa-focused oil and gas company said its 2020 group working interest production averaged 74,900 barrels of oil per day, in line with its prior expectations. Production in 2019 was at 86,700 barrels of oil per day.
The company's 2020 sales revenue was USD1.40 billion, down from USD1.68 billion in 2019. This was also in line with its previous guidance.
Tullow's 2020 pretax loss of USD1.27 billion narrowed from a USD1.65 billion loss in 2019, which it said was driven by non-cash exploration write-offs and impairments totalling USD1.24 billion.
Gross profit for the year was USD403 million, just above its guidance of USD400 million. For comparison, though, this was a 43% decrease from USD700 million in 2019.
Year-end net debt was reduced to USD2.4 billion from USD2.8 billion a year before, as a result of a USD430 million free cashflow.
"After a year of significant change for Tullow, we are now executing a robust, cash generative business plan which is focused on our most productive assets. We have transformed our cost base, implemented rigorous capital discipline and are well placed to benefit from higher oil prices. We will start a multi-year, multi-well drilling programme in Ghana next month to deliver sustainable and profitable production growth. Our self-help initiatives will deliver USD1 billion, including over USD700 million from asset sales in the past year. Strong business delivery, increased liquidity and improving commodity prices support constructive refinancing discussions," said Chief Executive Rahul Dhir.
The company agreed in February to a new debt capacity under reserved-based lending of USD1.7 billion, down from USD1.8 billion. This will result in liquidity headroom and free cash of USD900 million.
Tullow said it has been reviewing its business plan and operating strategy with creditors and their advisers, and the plan is expected to generate material cash flow and create a "solid foundation" to address near-term debt maturities.
"The combination of strong business delivery, increased liquidity, recent asset sales and higher commodity prices is providing a positive impetus to constructive discussions with creditors. The group is confident that a mutually satisfactory agreement on debt refinancing can be reached in the first half of this year," said Tullow.
Looking ahead, Tullow said it expects 2021 production to decline to 60,000 to 66,000 barrels of oil per day, due to a drilling hiatus, a planned shutdown on Jubilee in September and deferred development drilling on Simba in Gabon. However, the company noted the forecast will be adjusted for the sales of the Equatorial Guinea and Dussafu assets once these transactions complete.
The company's capital expenditure for 2020 was USD290 million, down from USD490 million in 2019. For 2021, Tullow forecasts capital expenditure of USD265 million.
Shares in Tullow were up 1.6% at 52.79 pence in London on Wednesday.
By Zoe Wickens; [email protected]
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