Tullow announces US$270 million capex in Ghana

Tullow Oil Plc, which operates the Tweneboa Enyenra Ntomme (TEN) and Jubilee oil fields, has announced a capital expenditure (capex) of US$270million for its Ghana operations.

This follows a jump in the group’s gross profit to US$634million from the US$403million in 2020, driven by its Ghana portfolio.

In all, its capex budget for 2022 is US$350million across its global portfolios including US$30million for non-operated portfolio; US$5million in Kenya; and exploration spend of US$45million. Decommissioning spend is expected to be US$100million.

“Following a transformational 2021, in which Tullow successfully refinanced its balance sheet, drilled highly productive wells in Ghana, and demonstrated operational excellence and financial discipline across the Group, we are now concentrating on the successful delivery of our long-term business plan,” its Chief Executive Officer, Rahul Dhir, said in the company’s full report for 2021.

He said this year will see a great deal of activity at the flagship Jubilee field, with investment in new infrastructure and new wells to grow production in the near term.

At TEN, he said, the plan is to drill two important, strategic wells that will “help define our future plans for the fields and will continue to build production in Gabon.

“I also expect us to make tangible progress toward our ambitious target of achieving Net Zero by 2030. With additional opportunities to deliver value across our portfolio, including gas commercialisation in Ghana, our revised Kenya development project, and an exciting well in a proven play in Guyana, we are well-placed to deliver value from our assets and to grow our business,” he added.

Outlook for 2022

The company’s oil production guidance remains 55 to 61 kboepd based on Tullow’s existing equity interests in TEN and Jubilee.

Tullow said the forecast will, however, be adjusted following the completion of the sale of Occidental Petroleum’s interest in Ghana to Kosmos Energy.

It estimates the full-year impact of the completed sale will be an addition of 5 kboepd (net) to the group’s 2022 production forecast, adjusted for completion timing.

Its full-year underlying operating cash flow guidance, meanwhile, remains US$750million, assuming US$75/bbl for the remainder of the year.

Apart from adding three new wells at Jubilee and the two strategic wells at TEN, Tullow plans to invest in infrastructure for the undeveloped Jubilee South East and North East areas – and also self-operate the Jubilee FPSO from mid-2022 onwards after the scheduled end of the contract with MODEC.

Another key plan for 2022 is to secure a gas commercialisation agreement in Ghana, which will come into effect once all foundation gas volumes have been delivered; this is forecast to occur before year-end, the statement added.

In Kenya, it said, discussions are progressing with potential strategic partners while it is also preparing to participate in the Repsol operated Beebei-Potaro well, which is a follow-up to the Carapa light oil discovery made in 2020 in the Kanuku licence, offshore Guyana.