Tullow - comment

H1 results in line with expectations following the lowering of guidance at the AGM in May.  Tullow still targets reducing Net Debt to $1.4bn or 1.0x Net Debt/EBITDAX.  CAPEX and cash taxes are significantly weighted towards H12024, resulting in a higher FCF in 2H.  

The next big event will be the arbitration of the Ghana Branch Profit Remittance Tax claims, which is expected no later than November.  This is the largest of the three disputed Ghana Tax claims, totalling $320m and the Company has not given any guidance on the outcome.  However, even If the ruling is against Tullow there will be no immediate cash payment, with management indicating they are likely to defend it further via the Ghanian courts.

Tullow has completed its drilling programme, improving expected cash flow over the next 12 months.   They will spend only minor CAPEX on seismic survey in H1 2025, to support drill candidate selection and optimise well placement ahead of a 2025/26 drilling programme.  The delay in future CAPEX is to boost cash flow and to further deleverage.  

There is no update on the Kenyan license and the associated Field Development Plan as Tullow continues to seek a strategic partner for this project.