Tullow records US$1.23bn loss in 2020

Oil giant, Tullow Oil, registered a loss of US$1.23 billion last year, driven by non‐cash exploration write‐offs and impairments, according to its 2020 Financial Statement.

It however recorded revenue of US$1.396 billion through net debt at the end of 2020 stood at US$2.4 billion.

The oil exploration and production firm however benefited from a strong operational performance in Ghana; as both FPSOs delivered in excess of 95% uptime during the year.

In 2020, Tullow said its West Africa oil assets performed in line with expectations delivering average working interest oil production of 74,900 barrels of oil per day.

In that regard, in 2021, working interest oil production is expected to average between 60,000 and 66,000 barrels of oil per day. This forecast it said will be adjusted for the sales of Equatorial Guinea and Dussafu assets once these transactions complete.

Rahul Dhir, chief executive of Tullow Oil Plc, said “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.”

He added, “our self‐help initiatives will deliver US$1 billion, including over US$700 million from asset sales in the past year. Strong business delivery, increased liquidity, and improving commodity prices support constructive refinancing discussions.”

Operations in Ghana

Tullow said the effects of the COVID‐19 pandemic on its operations have been managed safely across the business with no impact on production in Ghana.

This is pointed out has been achieved in close cooperation with the Government of Ghana that has enabled effective testing and quarantine measures to be put in place.

However, this increased the net cost of operations by US$10 million in 2020.

Both fields in Ghana, Tullow noted, performed in line with expectations in 2020, with the Jubilee field averaging 83,600 barrels of oil per day and the TEN field averaging 48,700 barrels of oil per day.

“This production performance was supported by increased and sustained gas offtake nominations from the government of Ghana, approval from the Ministry of Energy to increase flaring, higher than forecast facility up me of over 95% at both FPSOs and improved well optimization and water injection facility performance on the Jubilee FPSO.”

Kenya

It said throughout 2020, it worked closely with its joint venture partners to progress the full field development plan.

In August 2020, Force Majeure notices that had applied since May 2020 were withdrawn by Tullow and the joint venture partners.

However, in September 2020, the Government of Kenya agreed to an initial extension for the 10BB and 13T license blocks until 31 December 2020. At the CMD, Tullow announced a joint decision to re‐assess the development plan and design a project that is economic at low oil prices whilst preserving the phased development concept.

Uganda

On 23 April 2020, Tullow agreed on the sale of its assets in Uganda to Total US$500 million in cash on completion plus US$75 million in cash following the final investment decision (FID) and incremental post-first oil contingent payments linked to oil prices over US$62 per barrels.

However, on 28 May 2020, CNOOC Uganda Limited informed both Tullow and Total that it had elected not to exercise its pre‐emption rights.

Tullow Oil is presently trading at GHC11.92 on the Ghana Stock Exchange (GSE).