Tullow Oil - comment

Our projections for net debt was $1.5bn, $100m higher than Tullow’s own guidance in November. Now, Tullow is guiding $1.45bn, splitting the difference, with our overall CAPEX figure accounting for the main delta. 

But FY24 numbers are mainly irrelevant. Our main takeaway is FY25 production expectations of 50-55k boepd, which is ahead of our 48.5k boepd. Tullow cites that it "expects decline rates at Jubilee in 2025 to be lower than in the second half of 2024” due to better water injection reliability and increased water injection capacity.  

Tullow’s drilling programme is commencing earlier than we had anticipated, starting in May 2025, with two Jubilee wells expected to come on stream in Q3 2025.  This will boost production ahead of our expectations.  

The main credit headline this morning is management’s plan to repay the 2025 Notes at maturity (March) with a combination of cash on hand and the Glencore Facility, as we have stated previously.  The second part of the statement is more ambitious, stating they are seeking to refinance the Group’s capital structure during the remainder of 2025.  

The third statement of setting out a framework for capital returns and growth is frankly unbelievable.