Tullow Sees Richer 2018, Sells TEN Gas
Tullow said in a trading update January 10 that its balance sheet will improve in 2018. It also announced new acreage offshore Peru (see separate story) and disclosed a recent Ghanaian TEN gas sales deal.
CEO Paul McDade pointed to a “material improvement” in Tullow's balance sheet, following a reduction in net debt of $1.3bn last year, adding: “Over 2018 we expect to continue this positive momentum.” It reports full year results February 7.
Tullow also said it signed the ‘TEN Associated Gas (TAG) Gas Sales Agreement’ with the Ghanaian government last Q4. It expects the start of gas sales from TEN in the first half of this year, with gross gas sales equivalent to 4,200 boe/d (2,000 boe/d net to Tullow) forecast for full year 2018. Tullow disclosed in November 2017 that it agreed a price for Jubilee gas sales, once it has supplied the first 200bn ft3 from the field. Tullow was also cleared to resume drilling at TEN, with a multi-year drilling programme to be started this year; it expects 2018 gross TEN oil production of 64,000 b/d (net: 30,200 b/d).
The UK-based independent said its West Africa net oil production in 2017 averaged 89,100 b/d (from Jubilee and TEN offshore Ghana), net of 7,400 b/d received as insurance payments during outages at Jubilee. Net gas, including associated gas from the TEN offshore Ghana plus since-divested Netherlands gas, is expected to be 3,500-4,500 barrels of oil equivalent. That takes Tullow’s overall net oil and gas 2017 production expectation to 86,000 - 95,000 boe/d.
More outages are planned on Jubilee: Tullow said repairs to the production ship’s turret bearing in 1Q 2018 are expected to require two shut-down periods, totaling four to six weeks; a further planned shut-down of three weeks is expected end 2018 to rotate the ship to its permanent heading. Ghana's government also approved Greater Jubilee drilling October 2017 which will initially drill and complete new wells, and complete a well previously drilled in the Mahogany discovery.
Elsewhere, Tullow also plans to drill the Cormorant prospect on the PEL37 licence in Namibia in 2H 2018. It had previously announced new acreage in Cote d’Ivoire. But it expects to exit the M'Boundi field offshore Congo-Brazzaville soon (effective July 2017), and to cease production at the Chinguetti oil field offshore Mauritania. In 2H 2017, Tullow completed a farm-down of its 100% interest in Block C-18 offshore Mauritania to Total, Kosmos and BP leaving Tullow with a 15% non-operated interest.
Tullow also updated on its plans to produce oil in Kenya this quarter and to take a final investment decision by end-June with Total/Cnooc on a major Uganda oil project – tied to an export pipe via Tanzania.