Tullow Oil Announces a New Plan for the Kenya Project and Reports a Profit in the Interim

Posted on :Friday , 22nd October 2021

Tullow Oil returned with a first-half profit and a development plan for its Kenya operation on Wednesday, pushing shares in the Africa-focused company up as much as 9%.

Tullow and its joint venture partners have finished the redesign of the Kenya development project, according to the business, which also stated that the project's total gross capex is estimated to be around $3.4 billion, which is higher than the prior estimate.

The company which entered Kenya in 2010, now expects to recover 585 million barrels of oil (mmbo) from the project over the full life of the field, which JPMorgan analysts said in a research note was at least 14% higher than their estimate.

Tullow is in talks for strategic partners for the project, Chief Executive Officer Rahul Dhir told Reuters, adding that the company was also looking to cut its exposure in Guyana.

"Tullow is just taking a step back. The overall strategy is to allocate more capital to our core production assets, so what we are looking to do in Guyana for instance is to bring in partners and reduce our capital exposures," Dhir said.

Tullow, which has been operating in Africa since 1986, raised the lower end of its 2021 production target to reflect increased output from its Central-African Simba field while it pushed the planned maintenance shutdown of the Ghanaian Jubilee plant into 2022.

The company now expects 2021 output between 58,000-61,000 barrels Of oil equivalent per day (boepd) compared with its previous forecast of 55,000-61,000 boepd. Production for the first half fell by 21%, in line with Tullow's expectations.

The company's finance chief Les Wood will also step down by the end of March, with the search for a new CFO expected to conclude in the first quarter of 2022.

For the six months ended June, profit after tax was $93 million, compared to a loss of $1.33 billion last year owing to impairment costs. Earlier this year, Tullow refinanced its $2.3 billion debt.

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