Tullow Oil plc (Tullow) issues the following statement from its Chief Executive Officer, Rahul Dhir, ahead of its Annual General Meeting (AGM).
The meeting will take place at Tullow Oil plc, Building 9, Chiswick Park, London, W4 5XT at 11:00 BST today. We are also enabling shareholders to listen to the AGM as well as participate remotely. Instructions for joining the audio cast can be found at the end of this statement or within the Notice of Meeting.
The Group will publish a Trading Statement and Operational Update on 12 July 2023.
Statement from Rahul Dhir, Chief Executive Officer, Tullow Oil plc:
I would like to take the opportunity at today’s Annual General Meeting to reflect on the progress we have made since our last meeting and focus on the conviction we have that our business is on a path from recovery to growth. We find ourselves today at an inflection point. Strong operational and financial performance has created a business with strong foundations that is consistently delivering free cash flow, and concurrently, we have created a unique platform of assets and capabilities to deliver growth and value.
2022 – a year of strong delivery
As I outlined at our 2022 Full Year results in March, it was a year of strong business and financial performance. The cornerstone of strong performance is always safety, and I am proud that we recorded a second successive year of industry top quartile safety performance with no recordable incidents and no Tier 1 or 2 process safety events during the year. Other notable milestones in the year included:
- Group net production of 61,120 bopd, up 6% year-on-year, leading to free cash flow of $267 million.
- Accelerated deleveraging to net debt to $1.9 billion, hitting our gearing target of below 1.5x, 3 years ahead of plan.
- Excellent drilling and completion performance enabled us to accelerate the 2022 drill schedule and four Jubilee wells and two Enyenra wells were brought onstream during the year.
- Transition of operatorship to Tullow on the Jubilee FPSO is resulting in increased uptime and lower operating costs.
- First commercialisation of Jubilee gas in Ghana through an interim agreement – an important step towards agreeing long-term commercial terms for future volumes of the significant gas resource at Jubilee and TEN.
- Delivered over $450 million to our host governments in taxes and royalties; spent $173 million with local suppliers, supported 6,000 students with STEM scholarships or education support.
- Progressed our journey towards Net Zero by 2030; with work ongoing to eliminate routine flaring in Ghana by 2025 and Letter of Intent signed with the Ghana Forestry commission for our nature-based carbon offset project.
Update on 2023 progress and outlook
As previously outlined, 2023 will be a year of two halves, split by the major milestone of the Jubilee South East (JSE) project which remains on track to come on stream around the middle of the year. This will materially step-up production from the Jubilee field to average c.95,000 bopd in 2023 and exceed 100,000 bopd gross in the second half of the year. Our forecast capital expenditure of $400 million is weighted to the first half of the year, with free cash flow generation up in the second half and beyond.
The first of five Jubilee wells to be brought onstream this year, came online in the past few days at initial rates of c.17,000 bopd, above expectations. With three JSE producers and one injector still to come on stream, we are confident in the production ramp-up we have outlined in the second half of the year.
Other key updates from across the business include:
- Net production in the first quarter of 2023 was 53,700 bopd. Full-year Group production guidance of 58,000 – 64,000 bopd is unchanged.
- Jubilee production in the first quarter of 2023 was net 28,100 bopd (72,700 bopd), lower largely due to reduced water injection in late 2022 and into the first quarter of 2023, which was rectified in February 2023. Production from TEN held at 11,200 bopd net (20,300 bopd gross) and the non-operated portfolio delivered 14,400 bopd net, in line with expectations.
- Multi-year drilling programme in Ghana continues, with three Jubilee wells drilled, two completed, and the third completion under way.
- Good engagement ongoing with the Government of Ghana ahead of the planned formal submission of an amendment to the TEN Plan of Development (PoD) and securing a Gas Sales Agreement by mid-year. The amended TEN (PoD) sets out a clear pathway for creating value from the TEN fields alongside the proposed commercial agreement for the long-term supply of gas in Ghana from the TEN and Jubilee fields. A successful outcome would result in a significant volume of bookable gas reserves (in the range of 150-200 bcf net) on TEN.
- Production from Gabon and Côte d’Ivoire averaged 14,400 bopd net in the first quarter of the year, broadly in line with expectations.
- Proactive portfolio management through a swap deal agreed with Perenco in Gabon, enhancing Tullow’s exposure to our preferred fields, and giving greater access to future upside around existing infrastructure.
- Increased exposure to oil price upside as hedges stepped down in May 2023 creating c.60% upside exposure for the rest of the year.
- Kenya Field Development Plan submitted to the Government of Kenya and regulator, EPRA, in March; approvals, including ratification by the parliament, expected to conclude this year.
- Following the recent withdrawal of the Kenya Joint Venture Partners due to differing internal strategic reasons, Tullow will have 100% working interest in Blocks 10BB, 13T and 10BA. Taking full control creates more optionality, gives Tullow more flexibility in the ongoing process to secure strategic partners, creates a simpler Joint Venture Partnership and streamlines project delivery. Detailed farm-out discussions continue with a number of companies and we remain focused on securing a strategic partnership this year.
- Two disputed Ghanaian tax assessments filed for arbitration with International Chamber of Commerce in London in February 2023. We believe these assessments are without merit and we have high confidence in the strength of our cases. Despite taking this formal step to resolution, engagement with the Government of Ghana, including the GRA, continues with the aim of resolving these disputes on a mutually acceptable basis.
Changes to our Board
Jeremy Wilson retired from the Tullow Board in November following nine years of service. Mike Daly will have also served nine years at the end of this month and will step down following this AGM. I am grateful for both Jeremy and Mike’s guidance during the last three years.
Richard Miller was confirmed as Chief Financial Officer (CFO), having already made a significant contribution to Tullow during his tenure as Interim CFO. Richard continues to make a significant impact as we work to deliver our business plan.
We have also appointed a new independent non-executive Director of Tullow in Roald Goethe who joined us earlier this year. As a long-term supporter and shareholder of Tullow, Roald is familiar with Tullow’s strategy and aligned with our commitments as a trusted partner to our host nations. He also brings a deep understanding of the oil and gas industry in Africa with an entrepreneurial perspective.
Material near-term catalysts to unlock value
The Board remains confident that the business plan we have laid out will continue to deliver growth and unlock value, including:
- Increasing gross Jubilee production to over 100,000 bopd, while keeping relentless focus on production from the remainder of our fields, will transform our cash flow generation starting in the second half of this year.
- A long-term gas supply agreement with the Government of Ghana for indigenous gas will not only enhance energy security and facilitate industrial development in Ghana, but also unlock another revenue stream for Tullow and the Joint Venture Partnership from the substantial gas resource base both at Jubilee and TEN.
- Kenya holds the potential to add material reserves and create value for Kenya and our shareholders in the longer term, for minimal capex outlay today.
- Implementing our infrastructure-led exploration strategy to maximise value around our producing assets in West Africa, where we have a deep subsurface understanding, and access to infrastructure enables rapid development of discoveries. We also retain material positions in the emerging basins of Guyana and Argentina, where we continue to seek opportunities to unlock value from the significant resource base.
We continue to progress a range of options to address our debt maturities and position the business for a successful refinancing. We are on track to deliver in excess $800 million of free cash flow at $80/bbl in the period 2023-2025. This will enable us to reach our goal of being a low debt business with cash gearing of 1x or below and provide us with the financial flexibility to pursue value accretive opportunities or consider future shareholder returns.
I would like to thank our investors, host nations and host communities for your support and look forward to continuing this journey together to drive material value creation for all stakeholders.”
Rahul Dhir, Chief Executive Officer, Tullow Oil plc
AGM AUDIO CAST
This year, we are enabling shareholders to listen to a live audio cast of the AGM as well as participate remotely.
In order to participate at the meeting, you will need to visit http://www.meetnow.global/TULLAGM2023 on your device operating a compatible browser using the latest version of Chrome, Firefox, Edge or Safari. Please note that Internet Explorer is not supported. It is highly recommended that you check your system capabilities in advance of the meeting day.
If you are a shareholder, you can use your unique Shareholder Reference Number and PIN as displayed on your Form of Proxy/Attendance Card. If you are an appointed proxy or a corporate representative you will have had to be provided with a unique invite code to enter the meeting and exercise your rights. These credentials will be issued one working day prior to the meeting, conditional on evidence of your proxy appointment or corporate representative appointment having been received and accepted. If you have not been provided with your meeting access credentials, please ensure you contact Computershare on the morning of the meeting, but no later than one hour before the start of the meeting.
Access to the meeting via http://www.meetnow.global/TULLAGM2023 will be available from 10.00am. During the meeting, you must ensure you are connected to the internet at all times in order to vote when the Chair commences polling on Resolutions being put to the meeting. Therefore, it is your responsibility to ensure connectivity for the duration of the meeting.
If you experience any technical issues with the site you may either call our Registrar on the telephone number provided on the site or once you have entered the meeting, you can raise your question using the chat function. If you have technical issues prior to the start of the meeting you should contact our Registrar on the shareholder helpline.
The process of asking questions and accessing the AGM audio casting will be further explained within the application and located on the information page.
For further information contact:
|Tullow Oil plc
(+44 20 3249 9000)
(+44 20 3781 9244)
Notes to Editors
Tullow Oil plc
Tullow is an independent oil & gas, exploration and production group which is quoted on the London, Irish and Ghanaian stock exchanges (symbol: TLW) and is a constituent of the FTSE250 index. The Group has interests in over 30 exploration and production licences across eight countries. In March 2021, Tullow committed to becoming Net Zero on its Scope 1 and 2 emissions by 2030.
For further information, please refer to our website at www.tullowoil.com.
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