(Alliance News) - Tullow Oil PLC has dropped its production guidance for the year following asset sales in Equatorial Guinea and Gabon, it announced on Wednesday.
Production for 2021 is expected to be between 55,000 and 61,000 barrels of oil per day, down from the previous forecast of 60,000 to 66,000. The change in guidance partly reflects "first half delivery", but also the disposal of assets in Equatorial Guinea and of its Dussafu Marin permit in Gabon.
Working interest production in the first half of 2021 averaged 61,200 bopd, in line with the new expectations.
Tullow completed the sales of its Equatorial Guinea assets and the Dussafu Marin permit to Panoro in March and June respectively, receiving around USD133 million in total. The sales supported a "transformational" debt refinancing, Chief Executive Officer Rahul Dhir said.
Revenue for the first half of 2021 is expected to be around GBP700 million, assuming an oil price of USD58 per barrel, on par with the company's 2020 run rate with sales revenue of USD1.40 billion.
Annual capital expenditure guidance was reduced to USD250 million, down from USD265 million previously, reflecting the sales of assets.
"I am pleased to report that Tullow has made excellent operational and financial progress in the first half of 2021," commented Dhir.
"Tullow now has a strong financial footing and we are making very good progress in delivering on our highly cash generative business plan and continuing to reduce our debt."
Back in May, Tullow issues USD1.8 billion in senior secured notes with a five-year maturity. It also entered a new USD500 million super senior revolving credit facility. Cash financing costs for 2021 are expected to be USD290 million, including USD60 million in fees for the refinancing transactions.
As a result of the refinancing, Tullow said it will prepare its interim financial statements on a going concern basis with no material uncertainty.
Shares in Tullow were up 2.8% in London on Wednesday at 52.64 pence each following the announcement.
By Will Paige; willpaige@alliancenews.com
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Tullow Oil (TLW)