Nairobi — Tullow Oil plc, the independent energy Company building a better future through responsible oil and gas development in Africa, has announced its Full-Year Results for the year ended 31 December 2023.
In the results, Tullow reiterated the delivery of its plan, which is achieving targeted results and a much-improved business. During the year, Tullow continued to evolve and built a strong and unique foundation to create material value. Several significant milestones were achieved in 2023, including the start-up of Jubilee South East, which delivered material production growth.
Tullow generated $170 million of free cash flow, ahead of expectations, and reduced net debt by over $250 million. Tullow also demonstrated its ability to access long-term funding through the $400 million debt facility agreement with the United Kingdom's Glencore Energy.
Tullow reiterated that it is on track to deliver production growth in 2024 and expects to deliver $800 million in free cash flow from 2023 to 2025. This outlook puts the company on a solid footing to consider growth. The Full-Year Results statement and presentation show that Kenya remains a material option to drive value and growth for the Company. Last year, Tullow's contingent resource in Kenya doubled to 470mmstb, with Tullow now holding 100% of the licence and a Field Development Plan (FDP) under discussion with the Government. The increased interest provides Tullow with greater strategic flexibility.
According to Tullow Kenya BV (TKBV) Managing Director Mr Madhan Srinivasan, an updated Field Development Plan (FDP) to develop 470 mmboe resources to produce up to 120 kbopd, was submitted to the Government in March 2023.
The firm, which plans to invest more than US$10 million in Kenya this year, he disclosed, had received formal notification early this month from the Energy and Petroleum Regulatory Authority (EPRA) extending the review period of the updated Field Development Plan (FDP) to 30 June 2024.
While progressing the FDP, TKBV Tullow, Madhan added, is also actively working with the Government of Kenya to develop options to accelerate production and cash flow to unlock value from the local asset. These options, he said, are being explored with the Government and will supplement Tullow's Full Field Development (FFD) plan for Project Oil Kenya.
"We are collaboratively working with the Government of Kenya as they evaluate the FDP. Once their evaluation is concluded, the FDP will be submitted to the Cabinet Secretary for Energy and Petroleum for review before submission to Parliament for final approval. The development has been designed to be robust at lower oil prices, and we continue discussions with prospective strategic partners for this project," Madhan said.
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Tullow Oil plc Chief Executive Officer Rahul Dhir described 2023 as a year of significant achievements and highlighted the firm's transformation in the past few years.
"Soon after I joined Tullow in July 2020, we implemented a plan to transform our business. This plan is achieving targeted results, and since the end of 2020, we have generated over $1.1 billion of free cash flow, reduced net debt by over 30% and taken the business from peak gearing of 3x to 1.4x net debt to EBITDAX. ," Dhir said.
He added, "In line with our strategy, we continue to focus relentlessly on operational excellence, capital efficiency and investments to drive growth. This strategy is delivering material cash flow generation, and we are on track to deliver our target of c.$800 million free cash flow over the 2023 to 2025 period. Given the quality of our resource base, the opportunity set ahead of us and a reducing cost outlook, we expect to maintain these levels of free cash flow generation in subsequent years. With a strong balance sheet and this sustainable free cash flow outlook, Tullow has a strong and unique foundation to create material value for our investors, host nations and stakeholders, and we confidently look to the future."
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