Tullow Oil records over $500 million profit at half year as plans for oil search in Guyana advances

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UK-based Tullow Oil has recorded revenue of $905 million; gross profit of $521 million; post-tax profit of $55 million and free cash flow of $401 million for the six months ended 30 June 2018.

The company, in announcing its 2018 half-year results on Wednesday, said its three-year cost reduction programme delivered $708 million of savings versus the original target of $500 million.

“Today’s results are further evidence of the progress that Tullow has made in the first half of 2018. With this firm financial foundation, we can concentrate on growth across our three core businesses. Over the next two years, we will increase production from our current assets in West Africa, progress two large onshore developments in East Africa and step up our search for material new oil fields in Africa and South America through a multi-year exploration campaign which will initially focus on Namibia and Guyana. There is much to look forward to for Tullow’s shareholders, host countries and staff,” commented Paul McDade, Chief Executive Officer.

Tullow said in Guyana, technical and commercial ranking of potential prospects across both the Kanuku and Orinduik licences are ongoing. The company said the exploration team continues to see significant potential across multiple prospects in this area and is working to define which of these prospects will be matured for drilling in 2019 and 2020.

Earlier this year, Tullow agreed to increase its equity share in the Kanuku licence, offshore Guyana, from 30% to 37.5% in a farm-in deal with Repsol. This deal is subject to Government of Guyana approval.

Operations review

Group Production

Tullow’s West Africa first half 2018 oil production averaged 88,200 bopd, in line with expectations. This includes 11,900 bopd of production-equivalent insurance payments relating to the Jubilee field that has been realised under Tullow’s Corporate Business Interruption insurance policy. First half 2018 working interest gas production averaged 2,800 boepd. This results in a total Group oil and gas production average for the first half of 91,000 boepd.

The TEN field in Ghana and Tullow’s non-operated assets in Gabon, Côte D’Ivoire and Equatorial Guinea all performed ahead of expectations. The Jubilee field in Ghana performed slightly below expectations, however, enhancements to the gas compression system completed during the recent FPSO shutdowns are expected to improve oil production capacity.

Tullow’s 2018 full year working interest oil production forecast, including production-equivalent insurance payments, has been upgraded to 86-92,000 bopd. Working interest gas production is expected to average around 3,000 boepd, reflecting a later startup of gas sales from TEN. Overall Group production guidance for the full year is increased to 89-95,000 boepd.