Tullow Oil PLC (LSE:TLW) refrained from upgrading cashflow expectations amid rising crude prices, retaining guidance for US$750mln for 2022 based on a US$75 per barrel oil price.
The Africa focussed company, which expects to produce between 55,000 and 61,000 barrels of oil per day in 2022, meanwhile, reported results for 2021 in which it made a US$634mln gross profit and a US$81mln loss after tax.
Revenue amounted to US$1.27bn with underlying cash flow of US$711mln and US$245mln of free cash flow. This came as the Tullow saw an average realised oil price of US$62.70 per barrel for the year (whereas the market price today is around US$130, due to the conflict in Ukraine).
Net debt was marked at US$2.1bn at the end of the year, versus US$2.37bn a year earlier, following refinancing in May.
"Following a transformational 2021, in which Tullow successfully refinanced its balance sheet, drilled highly productive wells in Ghana and demonstrated operational excellence and financial discipline across the Group, we are now concentrating on the successful delivery of our long-term business plan,” said chief executive Rahul Dhir.
“This year will see a great deal of activity at our flagship Jubilee field with investment in new infrastructure and new wells to grow production in the near term and we are taking on the operation and maintenance of the FPSO. At TEN, we will drill two important, strategic wells that will help define our future plans for the fields and we will continue to build production in Gabon.
Dhir added: “With additional opportunities to deliver value across our portfolio, including gas commercialisation in Ghana, our revised Kenya development project and an exciting well in a proven play in Guyana, we are well-placed to deliver value from our assets and to grow our business."
Tullow noted that it has previously hedged some 75% of production through to May 2023, and 50% of output through to May 2024, up to US$76 per barrel though more recently, due to higher crude pricing secured prices above US$95 per barrel by the end of the hedging programme.
It said that hedging practices are in place to manage risks and protect against commodity price volatility, ensuring the availability of cash flow for re-investment in capital programmes – as at December 31, the company’s derivative instruments had a net negative fair value of US$180mln.
Tullow shares opened 7.6% lower in Wednesday’s early deals, trading at 57.38p.