This is in advance of the Group’s Full Year Results, which are scheduled for release on Wednesday 12 February 2014. The information contained herein has not been audited and may be subject to further review. In addition, Tullow has today separately announced a Kenya Operational Update.
- Over 200 mmboe of Contingent Resources added in 2013
- Significant oil discoveries at Amosing & Ewoi onshore Kenya
- 2013 Revenue of $2.6bn; strong cash flow of $1.9bn; funding sources diversified after bond issue
Tullow’s 2013 financial results are expected to deliver strong revenue and gross profit growth and operating cash flow of $1.9bn reflecting growth in production and stable oil and gas prices. Following a successful $650m debut bond issue in November 2013, Tullow’s balance sheet is well funded and the Group has unutilised debt capacity of $2.4bn.
Tullow’s exploration programme added over 200 mmboe to contingent resources in 2013 through important wells in Kenya and Norway from an exploration expenditure of $1 billion. In line with Tullow’s strategy, the exploration campaigns have now added an average of 200 mmboe per year to the Group’s Contingent Resources over the past seven years. However, not all wells were successful and Tullow expects a net write off of approximately $405 million in relation to 2013 exploration and $325 million in relation to prior years’ exploration expenditure.
In West Africa, Jubilee field production averaged approximately 100,000 bopd for 2013. The field exited 2013 with a production rate of approximately 100,000 bopd following recent issues with the FPSO’s water injection system which have now been resolved. As previously disclosed, the Ghana National Gas Company’s onshore gas processing plant will not be ready to receive Jubilee gas until 2H 2014. The completion of a third gas injection well in Q4 2013 brought only limited relief and further gas disposal options are being discussed with the authorities in Ghana. With resolution of these issues, Tullow estimates that Jubilee field production will average 100,000 bopd for 2014. These delays, which are not within Tullow’s control, do not affect the recoverable reserves of the field. Furthermore, Tullow is confident that, once the gas processing facilities onshore are completed, the Jubilee field will be able to produce to its full potential given the field’s well capacity and the strong performance of both the reservoir and the FPSO to date. In Mauritania, the Frégate‑1 well is expected to reach total depth of approximately 5,800 metres by the end of January 2014.
In East Africa, Tullow has today separately announced oil discoveries at Amosing‑1 and Ewoi‑1 onshore Kenya and increased discovered resources for the basin to over 600mmbo. The announcement also outlines the current ambition of the Government of Kenya and partners to reach project sanction in the period 2015/16. There have been a number of positive announcements from the Governments of Uganda and Kenya regarding joint initiatives for a crude oil pipeline to the Indian Ocean. Progress is also being made with the Government of Uganda on approval for field development plans. In Kenya and Ethiopia, Tullow will continue exploration, appraisal and testing activities in three of the ten frontier basins with some 20 exploration and appraisal wells and multiple flow tests planned over the coming 18 months.
Tullow has completed the sale of its Bangladesh assets and is awaiting Government consent to complete the sale of its Pakistan assets. As previously announced, the sale of our UK and Dutch assets is being restructured. The process for reducing Tullow’s stake and capital commitments in the TEN Project is ongoing with proposals being evaluated. The TEN development project remains on track for first oil in mid‑2016.
Group working interest production for 2013 averaged 84,200 boepd and production guidance for 2014 is 79,000 to 85,000 boepd. This forecast accounts for the sale of the Bangladesh assets.
Commenting today, Aidan Heavey, Chief Executive, said:
“Tullow is a stronger company at the beginning of 2014 than in January 2013. We made good progress across the business over the past year despite facing challenges within the oil and gas sector. Our operating cash flow is $1.9 billion, which funds our value creating exploration campaigns. Our exploration successes in Kenya and Norway mean that Tullow is meeting its resource addition targets and expects to deliver in excess of 200 mmboe in 2014. We have an exceptional exploration portfolio and will drill over 40 wells in the next 18 months in a wide-ranging campaign. We continue to advance a pipeline of high quality development projects in West and East Africa. 2014 is full of opportunities for our business and the Board is confident that Tullow will have another strong and successful year.”