Tullow Oil makes positive operational progress

(Sharecast News) - Tullow Oil reported positive operational progress in an update on Wednesday, with group production to the end of May averaging around 62,000 barrels of oil per day, in line with expectations.
The FTSE 250 company, which was holding its annual general meeting, said that figure reflected the sale of its Equatorial Guinea interests on 31 March, with no production from there recorded past the first quarter.

Chief executive officer Rahul Dhir noted the completion of the sale of the Dussafu Marin permit in Gabon on 9 June, adding that the firm would adjust its full-year guidance to reflect both of those divestments in its upcoming trading statement on 14 July.

"In Ghana, our operational improvement plan is delivering results with 98% average uptime year-to-date across both the Jubilee and TEN FPSOs," Dhir said.

"As we have previously stated, reliable gas offtake and water injection are an important part of our strategy to optimise reservoir performance and address production decline.

"We continue to enhance the capacities of both systems to support long-term stable production."

Tullow said its production performance was still being supported by reliable gas offtake from the Ghanaian government, which was regularly averaging between 110 million and 130 million standard cubic feet per day.

The firm was also still seeing improved water injection rates of over 200,000 barrels of water per day.

"In line with our plans outlined at our capital markets day, we announced in April that we started a multi-year drilling campaign in Ghana," Rahul Dhir said.

"In 2021, we are planning to drill four wells in total, consisting of two Jubilee production wells, one Jubilee water injector well and one TEN gas injector well.

"We have successfully drilled the first Jubilee production well and the Jubilee water injector well, and the reservoirs encountered are in line with expectations."

The rig would now carry out the completion of those two wells, with tie-in and start-up of both wells expected in the third quarter, Dhir explained.

In Kenya, Tullow said licence extensions were granted for blocks 10BB and 13T until the end of 2021, adding that alongside its joint venture partners, it had been working to deliver a full field development plan that was "sustainable and economic" at low oil prices.

"The technical work is now complete and has been aided by the dynamic data gathered through the early oil production scheme, which ended in 2020," Rahul Dhir said.

"Resource volumes are now being audited and a detailed project plan will be prepared for discussion with the Ministry of Mining and Petroleum and the government of Kenya."

Good progress on the project was being made, he added, with two tangible milestones recently achieved.

"Firstly, the first berth at the Lamu Port was commissioned in May by the President of Kenya.

"This is an important part of the broader Lamu Port and Lamu Southern Sudan-Ethiopia Transport corridor project.

"Secondly, the public hearing was recently held for the pipeline environmental and social impact assessment for the midstream project."

Overall, Dhir said the Kenya development project was continuing to receive "significant" government support, and was making "good" progress.

"I look forward to providing further updates covering the revised development plan and our strategy in the second half of the year.

"Finally, our exploration team continues to focus on unlocking value from the substantial risked resources in the emerging and maturing basins of Guyana, Suriname, Argentina and Côte d'Ivoire."

At 0932 BST, shares in Tullow Oil were up 1.74% at 65.51p.