Tullow became one of the UK’s hottest independent oil explorers after making major African discoveries in the late 2000s. But it took on huge debts to develop them, and in recent years struggled to bring Kenyan fields onstream. This year it agreed to sell the Kenyan deposits and offloaded assets in Gabon as it looks to pay down debt.
Tullow now expects output of 40,000-45,000 barrels of oil equivalent per day (boepd) for the year, down from 50,000-55,000 boepd projected earlier. It reported an average production of 40.6 kboepd in the first half, excluding Gabon.
Tullow Oil has agreed to sell its entire stake in Kenya to Auron Energy E&P, an affiliate of Gulf Energy Ltd, for a minimum cash consideration of $120 million.
The deal marks Tullow’s full exit from the East African country, where it holds 463 million barrels of 2C oil resources in the South Lokichar Basin.
The Tullow assets are set to produce around 10,000 barrels of oil a day this year, the company said, adding that it will use the funds to reduce its debt profile. The company has been setting up deals to sell assets and bring down debt ahead of $1.39 billion in maturities next year.
Under the terms of the transaction, Tullow will receive an initial cash payment of US$40 million upon completion, followed by another US$40 million by June 2026 or upon the approval of a Field Development Plan. A final US$40 million, contingent on future oil prices, will be paid over a five-year period starting in 2028, with any outstanding balance to be settled by 2033.
Shares of Tullow Oil fell as much as 10% in London trade today after the West Africa-focused oil company cut its full year free cash flow view to $150-$200m from its previous estimate of $200-$300m.
Africa-focused producer has increased access to oil price upside for the remainder of this year and next, it said in trading update
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The evaluation of a field development plan (FDP) submitted by Tullow Oil for the Turkana oil fields has been extended to June.
Tullow Oil has issued a statement in advance of the Group’s 2023 Full Year Results scheduled to be announced on 6 March