Tullow Oil PLC (LSE:TLW) shares were trading on the front foot in Wednesday morning’s deals after the oil producer told investors it would report around US$1.7bn of revenue for 2022.
The oil and gas company, in a trading update ahead of full-year financial results (due for release 8 March), confirmed full-year production arrived within guidance to average 61,100 barrels oil equivalent per day (boepd). Hedging costs were said to be around US$313mln in the year.
Tullow said it anticipates underlying cash flow will come in at around US$1bn when its results are in, whilst free cash flow is expected at around US$267mln, which was above the company’s guidance.
During 2022, as energy prices soared, the company reduced net debt to around US$1.9bn at the end of the year, from US$2.1bn, and Tullow said it had around US$1.1bn of liquidity headroom.
"Strong operational delivery, rigorous focus on costs and capital discipline, the increased equity in our key operated fields in Ghana and higher oil prices drove material, expectation-beating free cash flow generation in 2022, accelerating the group's deleveraging towards a net debt to EBITDAX ratio of 1.3 times by the year-end,” said chief executive Rahul Dhir.
Looking to 2023, it meanwhile pitched its guidance at 58,000 to 64,000 boepd and said it would expect to generate some US$900mln of operating cash-flow (based on an average crude price of US$100 per barrel).
Beyond that, it models US$700mln to US$800mln of free cash generation for 2024 and 2025, based on an estimated oil price of US$80 per barrel.
Tullow has budgeted some US$400mln of capital expenditure in 2023, with most of the investment planned for Ghana where it intends to spend US$300mln and it plans for US$90mln of decommission costs.
Dhir, meanwhile, added: “In 2023, we expect Jubilee production to exceed 100,000 bopd once the new wells drilled in the southeast of the field are brought on stream.
“Our capital investment this year, in particular in Ghana, is expected to support production growth through to 2025 and material free cash flow generation."