Tullow - comment

Tullow had previously reported in mid-July the headline numbers for H1, so today’s H1 results are not new news.  “Inflection point” is the key theme for management, as Jubilee now produces above 100,000 boepd p.a.  Production guidance was lowered to 58-60,000 boepd, (from 58-64,000 boepd) with cashflow and Capex remaining unchanged which is a little light with  Free Cashflow for July and August reaching $70m positive versus the implied $200m for H2.  CAPEX will step down for FY24 & FY25 with cumulative CAPEX of $500-600m versus over $750m for FY22-23.  This lower Capex guidance is partially a result of reduction in subsea infrastructure investment as new wells planned over the coming years will be tied into existing infrastructure.  This enables the Company to focus on net debt reduction, which the Company aim to bring below $1bn with gearing to below 1x by FY25 (at $80/bbl).  

The Company continue to work off a range of options to address upcoming maturities, with further details later this year.  We will update our model later but there has been no new news in the results to change our projections.   We remain positive on the name and believe there is an opportunity in the name.