Tullow Oil has reported a huge drop in its annual losses and a decline in its net debt levels, whilst also saying production levels at its core offshore oil-producing assets in western Africa could surge in the next few years, but its shares still tumbled.
The Irish-founded and Africa-focused oil and gas company said it made an after-tax loss of $81m (€74.3m) last year, down from a loss of over $1.2bn in 2020.
Gross profit jumped from $403m to $634m, but total revenue was down from just under $1.4bn to $1.27bn.
Tullow said it closed last year with net debt of just over $2.1bn. That was down from the near $2.4bn in debt it held at the end of 2020.
“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,” said Tullow’s chief executive Rahul Dhir.
“I also expect us to make tangible progress towards our ambitious target of achieving net-zero by 2030,” Mr Dhir said.
Tullow’s CEO said its Jubilee offshore oilfield in Ghana could produce 100,000 barrels of oil equivalent per day (boepd) and the TEN field 50,000 boepd by 2025 under current spending plans.
Tullow will spend most of its $350m investment programme this year on Ghana, where Jubilee produced around 75,000 boepd in 2021 and TEN 33,000 boepd. Tullow holds a 35.5% stake in Jubilee and 47.2% of TEN.
The company reported 2021 free cash flow of $245m, about 43% down from the previous year and broadly in line with guidance of $250m, and reiterated its free cash flow would reach $100m at an oil price of $75 a barrel.
Oil prices have soared in recent months, with current benchmark contracts at around $130 a barrel, but Tullow hedges most of its output with price floors and ceilings to shield against price volatility.
In 2021, Tullow lost out on $153m in revenue due to hedges. Tullow is forecasting this year’s overall output to reach 55,000 to 61,000 boepd.
Of this, it hedged 42,500 bpd at an average floor of $51 a barrel and average ceiling of $78 a barrel and around 33,100 bpd of next year’s output at $55 and $75 a barrel, with smaller production volumes hedged into 2024.
Shares in Tullow — which has a market value of around $1.2bn – tumbled by over 12%.