How our business creates value
Tullow’s business model is to monetise oil and gas from our portfolio of assets and in doing so, fulfil our purpose of building a better future. Tullow’s focus has changed in recent years from an exploration-led business to a company focused on unlocking value from its producing assets. This is reflected in our decision to allocate in excess of 90% of our capital expenditure to our producing assets.
Delivering improved operating performance to maximise value from our producing assets is a key focus, alongside steps taken to reduce our cost base and simplify our capital structure.
Together, these building blocks deliver a highly cash generative business plan that seeks to generate material cash flow to fund investment, grow our business and reduce debt, while providing multiple benefits to our host nations. We have a number of stakeholders but consider our investors, our host nations and our people to be the primary participants for our business.
A strategy to fulfil our purpose
Over the past year, Tullow has refined its strategy in light of growing climate pressures, and we believe the oil and gas industry can, and should be, an engine of development for developing economies, particularly in Africa. As long as global hydrocarbon demand exists, it is imperative that Africa’s oil and gas assets are managed responsibly, efficiently and transparently and that oil and gas production in developing economies creates long-lasting economic and social benefits. Tullow has a long and strong history in Africa and is well
positioned to continue as a leader in the continent’s oil and gas industry.
We believe that reliable and adequate energy supplies are critical for world economic and political stability and that fossil fuels will remain an integral part of the energy mix for some time. Therefore, oil and gas resources need to be developed and produced responsibly. Africa continues to suffer from extreme energy poverty and there is a strong case for a fair transition where African economies have the opportunity (like much of the world until now) to benefit from the responsible development of their resources.
The Jubilee and TEN fields in Ghana provide a set of highly profitable investment opportunities through a combination of infill drilling, facilities expansion, production from currently undeveloped parts of the fields and near field exploration. Tullow’s non-operated production in Gabon and Côte d’Ivoire also provides infrastructure-led (ILX) exploration opportunities and a number of diverse low-risk investment projects. Tullow will also seek to realise upside through its discovered resources in Kenya and unlock value from its exploration assets. As many companies allocate capital away from the upstream business and divest assets, Tullow also has potential to grow its business through acquisitions.
We continue to carefully manage our costs and believe that every barrel matters and every dollar counts. The issuance of $1.8 billion of Senior Secured Notes with a $500 million revolving credit facility in May 2021 has put Tullow on a much firmer financial footing and the Group now has a pathway to invest in its assets to maximise their value.
We must achieve low cost and capital efficient operations to produce barrels competitively while ensuring the safety and wellbeing of our people and minimising our environmental impact. Delivering reliable asset performance is critical to this, carrying out timely maintenance and having the right processes and people in place to maximise uptime.
Tullow’s assets generate material revenues for governments through the production and sale of oil and gas. Our assets also have the potential to allow us to partner with governments to contribute towards domestic energy needs and help alleviate energy poverty in Africa. This must be achieved with high standards of compliance, zero tolerance for corruption and continuous tax transparency to maintain and develop quality relationships with our host
Tullow is committed to developing local content and investing in social projects to improve the everyday life of the people in our host nations. With a target to achieve Net Zero by 2030 on Scope 1 and 2 net equity emissions and an emphasis on responsible operations, Tullow will ensure that the oil and gas resources of host countries are developed efficiently and safely while minimising the environmental impact. Through our work, we will deliver shared prosperity and create value for our investors, staff, host nations and communities.
We are fostering an open team culture, with good engagement from our people. Equality and transparency are central to the way we operate and to helping us earn the trust of all those with whom we interact. Tullow is becoming more performance focused, empowering our people to deliver and be valued for their contribution. We also have a renewed focus on diversity and inclusion, recognising that collectively leveraging our individually diverse backgrounds and experiences will make us a more successful organisation.