Tullow Oil - comment

Production, as always, is the key.  Tullow Oil released its November trading statement confirming its full-year guidance. But behind the headline, there are plusses and minuses.  Jubilee has underperformed due to a myriad of problems, including power outages, higher water content and unplanned downtime at the onshore gas processing plant.  Other production sites have performed well, allowing Tullow to meet its overall production guidance.  

The outcome of the arbitration in respect of Ghane Remittance Tax issue is now expected by year-end.  Reportedly not connected, but the Ghana government also have outstanding invoices totaling $40m in relation to gas supply.  This, plus working capital movements will impact year-end cash, leaving free cashflow $50-100m lower than previously guided.  

The 2025 bonds are covered, and the Company is progressing a range of options to manage debt maturities and optimise its capital structure. Production and production issues remain the key metric!