Tullow Oil PLC reports loss as it makes US$1.23bn of exploration write-offs
“We are now executing a robust, cash generative business plan which is focused on our most productive assets,” said Rahul Dhir
() reported a US$1.22bn loss for the 2020 financial year, as it made US$1.23bn of non-cash write offs and impairments against its exploration assets.
The company, which previously built its reputation in exploration, last year exited operations in Jamaica and the Comoros Islands and significantly reduced its footprint in Côte d’Ivoire and Peru.
It meanwhile retains ambitions in Suriname, Guyana, Argentina, and Namibia.
Tullow produced 74,900 barrels of oil per day, in line with expectations, and generated some US$1.39bn of revenue. Gross profit was marked at US$403mln.
The company highlighted some US$598mln of underlying operating cashflow.
“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,” said chief executive Rahul Dhir.
“We have transformed our cost base, implemented rigorous capital discipline and are well placed to benefit from higher oil prices.”
Tullow’s debt pile remained at US$2.4bn at the end of the year. It noted that it has been reviewing its business plan and operating strategy with its creditors and their advisers, as debt refinancing is pursed.
It noted that it recently received approval for a new US$1.7bn debt capacity under its reserve based lending facility, and it subsequently has liquidity headroom and free cash of US$0.9bn. Tullow added that it is confident that a mutually satisfactory agreement on debt refinancing can be reached in the first half of this year.
Looking to 2021, the company said production in the present financial year is in line with expectations, and repeated guidance of 60,000 to 66,000 bopd.
Noting higher crude prices the company highlighted that each US$10 increment in the crude oil price delivers Tullow around US$100mln of additional cash flow.
Pointing to catalysts, Rahul Dhir said: “We will start a multi-year, multi-well drilling programme in Ghana next month to deliver sustainable and profitable production growth.
“Our self-help initiatives will deliver c.US$1bn, including over US$700mln from asset sales in the past year. Strong business delivery, increased liquidity and improving commodity prices support constructive refinancing discussions.”
Read More: Tullow Oil PLC reports loss as it makes US$1.23bn of exploration write-offs