Tullow Oil, the independent oil and gas exploration and production group, has announced its Full Year Results for the year ended 31 December 2022.

2022 FULL YEAR RESULTS HIGHLIGHTS

• Significant growth in revenue to $1,783 million (including hedge costs of $319 million), representing a c.40% increase versus 2021.
• Gross profit of $1,086 million (2021: $647 million); profit after tax of $49 million (2021: loss after tax of $81 million).
• Increase in underlying operating cash flow to $972 million (2021: $711 million) and free cash flow to $267 million (2021: $245 million), despite increased capital expenditure of $354 million (2021: $263 million), decommissioning expenditure of $72 million (2021: $69 million) and $126 million consideration for the pre-emption transaction in Ghana.
• Net debt at year-end reduced to $1,864 million (2021: $2,131 million); cash gearing of net debt to EBITDAX1 of 1.3 times (2021: 2.2 times) three years ahead of original target; liquidity headroom of $1,055 million (2021: $876 million).
• Industry leading safety performance, with zero lost time injuries and zero Tier 1 process safety incidents across Tullow’s global operations in 2022.
• Group working interest production averaged 61.1 kboepd (2021:59.2 kboepd).
• Strong operating, drilling and completion performance in Ghana, with facilities uptime of c.97% and four Jubilee wells and two Enyenra wells brought online. Two Ntomme riser base area wells were also drilled but did not encounter economically developable resources.
• The transition of operatorship of the Jubilee FPSO took place in July 2022 and FPSO uptime averaged c.99% in the second half of 2022, compared to c.95% in the first half.
• Interim Gas Sales Agreement for 19 bcf of Jubilee gas executed, representing the first commercialisation of Jubilee gas.
• A significant milestone was reached in Ghana with a Letter of Intent (LoI) signed with the Ghana Forestry Commission for a nature-based carbon offset project. Final Investment Decision (FID) is expected in 2023.
• New exploration licence secured in Côte d’Ivoire (CI-803), building a strategic position adjacent to the Group’s producing fields in Ghana.
• Phuthuma Nhleko appointed as Chair from January 2022.

2023 OUTLOOK

• Group working interest oil production guidance of 58 to 64 kbopd.
• Gross production from Jubilee expected to increase to over 100 kbopd with four new wells at Jubilee South East and a further Jubilee producer onstream later this year.
• Forecast capital expenditure of c.$400 million, split c.$300 million in Ghana, c.$40 million in Gabon, c.$20 million in Côte d’Ivoire, c.$10 million in Kenya and c.$30 million on exploration and appraisal activities.
• Completion of Jubilee South East infrastructure in the first half of 2023 will mark the end of the current major infrastructure spend on Jubilee.
• Forecast decommissioning expenditure of c.$90 million in the UK and Mauritania, with a further c.$20 million placed into escrow funds for future decommissioning in Ghana and parts of the non-operated portfolio. Decommissioning expenditure is weighted more than 80% to the first half of the year.
• Full year underlying operating cash flow guidance of c.$900 million at $100/bbl (c.$800 million at $80/bbl).
• Full year free cash flow guidance of c.$200 million at $100/bbl (c.$100 million at $80/bbl). Free cash flow will be weighted towards the second half of the year as the Jubilee South East wells come onstream.
• Cash gearing of net debt to EBITDAX expected to be c.1 times by year end at $100/bbl.
• Jubilee FPSO operations & maintenance (O&M) costs expected to be c.23% lower than in 2021, following O&M transformation undertaken in 2022.
• Plan to agree a long-term gas sales agreement with the Government of Ghana covering both Jubilee and TEN fields.
• Two disputed Ghanaian tax assessments filed for arbitration with International Chamber of Commerce in London in February 2023.
• Continued focus on securing FDP approval and a strategic partner for Project Oil Kenya.
• Richard Miller appointed as Chief Financial Officer (CFO) from January 2023.
• Roald Goethe appointed as independent non-executive Director from February 2023. 

Rahul Dhir, Chief Executive Officer, Tullow Oil plc, commented:
“2022 saw Tullow successfully deliver against our business plan. A high focus on cost control and a disciplined approach to operational efficiency has driven a very strong performance for the year, with group production in line with guidance and expectations, delivering free cash flow of $267 million, lowering net debt to $1.9 billion and reducing cash gearing to 1.3x net debt to EBITDAX.

“Looking ahead, we have multiple catalysts to deliver further profitable growth. There is strong momentum across the portfolio with the commissioning of Jubilee South East on track for the second half of 2023, bringing undeveloped reserves online and Jubilee gross production to more than 100 kbopd before the end of the year. Engagements to secure a strategic partner for the Kenya development project continue and we are preparing a plan of development to monetise the remaining resources at TEN.

“We have created a unique platform of assets and capability, including industry leading safety performance, which positions us strongly to create significant value for all our stakeholders.”