Tullow swings to $435m loss

Tullow Oil plc swung to a loss driven by impairments and write-offs totalling $435 million from its operations.

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Year results for 2023 showed loss from continuing activities of $110m compared with a $49m profit in 2022.

The group wrote off exploration costs of $27m (2022: $105 million) mainly in Kenya following withdrawal of the JV partners.

A re-assessment of risks resulted in a $17.9m impairment and write-offs of $3.3m in Cote d’Ivoire, $3.4m for the Akoum B well in Gabon and $2.5m in Guyana.

A further net impairment on property, plant and equipment amounted to $408m (2022: $391m) driven by a reduction in TEN reserves in Ghana partially offset by oil price.

Revenue for 2023 reached $1.6 billion ($1.8bn) driven by lower oil price.

Adjusted EBITDAX totalled $1.2bn ($1.5bn) while gross profit fell to $765m ($1bn).

Tullow’s free cash flow decreased to $170m ($267m) and its net debt decreased to $1.6bn ($1.7bn).

Guidance for 2024 includes a growth in production with group working interest production expected to average between 62 to 68 kboepd including c.7 kboepd of gas.

Capital expenditure for the coming year is $250m comprising $160m in Ghana, $60m on the non-operated portfolio, $10m in Kenya and $20 on exploration.

Tullow said that year-end net debt is expected to be less than $1.4bn while the group is on course to deliver targeted $800m free cash flow over 2023 to 2025 period.

Chief executive Rahul Dhir added that the year had seen significant achievements, including start-up of Jubilee South East, new revenue from the sale of Ghana associated gas, and reserves growth in Gabon through licence extensions.

“We also generated free cash flow ahead of expectations despite a lower year-on-year realised oil price and demonstrated our ability to access long-term capital through the $400 million debt facility agreement with Glencore.

“In line with our strategy, we are continuing to focus relentlessly on operational excellence, capital efficiency and investments to drive growth.

“Tullow has a strong and unique foundation to create material value for our investors, host nations and stakeholders and we look to the future with confidence.”