Tullow forecasts 23 percent decline in 2021 production

Tullow Oil has forecasted a decline in its share of production from the Jubilee and TEN fields by 22.7 percent this year.

In the company’s recent trading and operational update, production from the two fields is forecast at 40,500 barrels of oil per day (bopd) in 2021, down from 52,400 bopd during 2020.

The decline is expected to reduce Tullow’s average working interest oil production across its assets from 74,900 bopd in 2020 to 60-66,000 bopd in 2021.

“This forecast reflects the drilling hiatus in 2020, a planned shut-down in September on Jubilee and deferred development drilling on Simba in Gabon,” the company said in the update.

It said oil production from Jubilee and TEN for the year to date is in line with expectations, supported by gas offtake from the government of Ghana of 125 million standard cubic feet per day (mmscfd).

The company is planning to commission a new oil offloading system on Jubilee, which is expected to be ready for a first lifting in February. Further, a drilling rig is being mobilised to Ghana to commence operations in the second quarter of the year, and the first new production well on Jubilee is forecast to be onstream in the third quarter.

“Despite the challenges that 2020 presented, Tullow delivered production in line with expectations, executed major reductions to its cost base and reduced net debt through the Uganda asset sale,” said Rahul Dhir, Chief Executive Officer, Tullow Oil Plc.

“Tullow has a busy year ahead as we begin implementing the business plan that we laid out at our Capital Markets Day. The plan is focused on ensuring that Tullow’s producing assets in West Africa reach their full potential. We will leverage the new plan and our reduced cost base to generate positive free cash flow at current commodity prices, drive down our net debt and deliver a robust balance sheet,” he added.

He said the impact of COVID-19 had been managed effectively across the group, with a negligible impact on production.

The company’s 2021 capital expenditure is forecast to be US$265 million, with an additional US$100 million to be spent on decommissioning. Tullow also disclosed that its completed restructuring will deliver sustainable annual cash savings of over US$125 million.