Tullow Oil narrows output guidance as H1 profits drop

Oil and gas group Tullow Oil said profits more than halved in the first six months of 2023 on the back of a significant drop in crude prices, as it disappointed the market with lower-than-expected output guidance for the full year.

The company narrowed its full-year production target to 58,000-60,000 barrels of oil equivalent per day (boepd), at the lower end of previous guidance of 58,000-64,000 boepd.

Tullow said this was due to the first-half performance at its flagship Jubilee field offshore Ghana being "slightly below expectations" and the timing of the Jubilee South East start up in the second half of the year.

Despite sales volumes rising to 56,900 boepd in the first half of 2023, from 53,500 boepd in the first half last year, the realised oil price slumped to $73.3 a barrel, down from $86.3 a barrel a year earlier.

As such, total revenue came in at $777m, compared with $859m previously.

Underlying cash operating costs fell to $136m from $143m, but that wasn't enough to stop pre-tax profit from continuing activities falling to $217m, from $561m. Basic earnings per share dropped to 4.9 cents, from 18.4 cents.

"We are at an important inflection point in the evolution of our business plan," said chief executive Rahul Dhir. "For the last two and a half years we have relentlessly focused on capital discipline, operational performance and appropriate investment in our assets. This has resulted in a much-improved business, material debt reduction and most recently, the delivery of Jubilee South East which has substantially increased production.

"We now switch to harvesting mode as our business is set to generate c.$800 million of free cash flow between 2023 and 2025, whilst we will continue to run our business with the same discipline. This will enable us to further reduce our debt, put in place a sustainable capital structure and grow our business to create value for our investors, host nations and employees."