Morning Energiser SP Angel28 Apr 2026 11:17
Tullow Oil (TLW LN) 12.7p, Market Cap £187m: Positive outlook on strong volumes
• Tullow reported average FY25 production of 40.4kboe/d (82% oil) generating $847m revenues, $586m adj EBITDA and $99m free cash flow to end the period with $1.35bn net debt as at December 31.
• The Company announced average 1Q26 production of 43.4kboe/d and agreed a gas payment security with the Government of Ghana, which relates to c.$110 million historical gas receivables.
• Tullow now expects average FY26 output to expected to be at the higher end of the previously announced 3442kboe/d guidance, with free cash flow guidance of $70-175m at $70-100/bbl based on $200m capex.
• The Company also completed a refinancing including an extension to its senior secured notes and Glencore facility to November 2028 and May 2030 respectively, and a new $100m cargo pre-payment facility providing additional liquidity.
After over a year of negotiations with its creditors, Tullow is up 10% today after a refinancing that provides a financial runway of over two years, which creates a platform to drive operational and financial performance improvement going forwards. The Company is working to improve production performance this year through improving waterflood and fluid lift optimisation, as well as additional volumes from the ongoing drilling campaign, in order to capitalise on the current high oil price environment. There is a new CEO is place with a priority to strengthen the balance sheet, but even under the current high price environment we see limited free cash flow this year to accelerate deleveraging without positive cash receivable and tax catalysts in Ghana. We continue to expect other E&P players to take an interest in Tullow’s operated portfolio and flagship Jubilee asset, in expectation that merging with a stronger balance sheet could lower the cost of debt and boost investment levels and output.
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