Tullow Oil cuts production guidance; sees rise in operating cashflow

Oil company Tullow Oil downgraded its annual output guidance, citing the sale of assets in Equatorial Guinea and 'first-half delivery', but forecast higher cashflow as the oil price recovers.

Production for the year through December was now expected to be between 55,000 and 61,000 barrels of oil per day (bopd), compared to previous guidance of 60,0000-to-66,000.

Output in the first half was 61,200 bopd.

'The guidance reflects the sales of the Equatorial Guinea assets and the Dussafu Marin permit and first half delivery,' Tullow Oil said.

The company completed the sales of its Equatorial Guinea assets and the Dussafu Marin permit in Gabon to Panoro in March and June respectively, receiving around $133 million.

Revenue for the first half was expected to be around $700 million, with a realised oil price of $58 per barrel, including hedge costs of about $50 million.

First-half underlying operating cashflow was expected to be about $200 million, with net debt at 30 June of around $$2.3 billion.

Capital expenditure guidance for the full year was trimmed to about $250 million, from $265 million.

Looking forward, annual underlying operating cashflow for the full year, assuming $60 per barrel oil for the remainder of the year, was expected to be about $600 million.

'I am pleased to report that Tullow has made excellent operational and financial progress in the first half of 2021,' chief executive Rahul Dhir said.

'Our producing fields in West Africa are performing well and we have successfully started our drilling programme in Ghana.'

'This strong operational performance, combined with continued capital discipline, improved market conditions and asset sales in Gabon and Equatorial Guinea, supported our transformational debt refinancing.'

'Tullow now has a strong financial footing and we are making very good progress in delivering on our highly cash generative business plan and continuing to reduce our debt.'