Tullow Oil hit by payment delay, but sees higher output

16th January 2019

By: Reuters

  

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A delay in receiving payment from the sale of a stake in Ugandan oilfields caused Tullow Oil to miss cash flow and debt forecasts on Wednesday, although the firm said it expected to receive the money soon and also forecast higher production.

The Africa-focused company said it expected production to grow to between 94 000 bbl/d and 102 000 bbl/d of oil-equivalent this year from 90 000 bbl/d of oil-equivalent last year, as it increases output in Ghana.

Tullow had previously expected around $208-million from selling part of its stake in Ugandan oilfields to come in before the end of 2018, but the timeframe slipped, hitting its free cash flow and debt reduction plans.

Free cash flow stood at $410-million. It had previously said its cash flow for 2018 could reach as much as $700-million. Crude oil prices slumped by more than a third in the second half of 2018 to below $50/bl.

"This has the potential to disappoint the market today; though as this cash should be received in (the first half of 2019) it is a transient issue," JP Morgan said of the Uganda delay.

At 0825 GMT, Tullow shares were down 1.9% at 196.37 pence.

The company's net debt at the end of last year stood at $3.1-billion, higher than the $2.8-billion forecast.

Uganda's energy minister said on Dec. 20 she had given Tullow conditional approval to sell part of its stake in Ugandan oilfields to France's Total and China's CNOOC, but only after $167-million of tax on the deal is paid - a view Tullow disagrees with.

"We're in the final throes of discussion with Ugandan authorities to get the deal closed," Tullow CEO Paul McDade said, adding he hoped to get it done in the first quarter.

Tullow said in November it would return to paying dividends, which it suspended in 2015 due to the oil price crash, and expects to pay out at least $100-million from 2019 with an option for a special dividend for this year.

The company said it had hedged around 55 700 bbl/d of oil at a floor of $56.24/bl this year.

Its 2020 hedging position locked in 25 000 bbl/d of oil with an average floor price protected of $59.00/bl.

Edited by Reuters

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