Tullow Oil PLC (LSE:TLW) has retained its production guidance of 59,000 to 65,000 barrels of oil equivalent per day (boepd) for the full year ahead of its merger with Capricorn Energy.
In a trading statement issued ahead of interim results due for publication in September, the oil company said it generated some US$800mln of revenue in its first half, supported by a realised oil price of US$107 per barrel (averaging US$87 per barrel after hedging).
Free cash flow was neutral for the period, it said, whilst noting that full-year capital spending was US$150mln in the first half and is expected to amount to US$380mln for the full year.
Advancing the merger, Tullow told investors that it expects a shareholder vote towards the end of this year.
“The proposed merger with Capricorn is an important enabler for a new business plan of the combined group, leveraging the combined resources of both companies and underpinned in part by the accelerated implementation of these projects,” said chief executive Rahul Dhir.
“With a new business plan, pre-tax cost synergies of US$50mln per year, the opportunity to drive down cost of capital and further optimise capital allocation, the combined group will be well positioned to play a leading role in the African energy sector, delivering material value for all shareholders and our host nations.”
In terms of its operations, Tullow highlighted progress with the drill-bit in Ghana were seven new wells have been drilled since April 2021 – drilled on average at a cost of less than US$50mln per well.
Tullow added that the pace of drilling is expected to accelerate at the Jubilee field into the fourth quarter.
The company’s part-owned Jubilee field produced some 82,400 boepd over the first half whilst the TEN fields ran at 24,300 boepd – representing some 30,800 and 12,500 boepd respectively net to Tullow.
It noted that it saw strong uptime ratios at its floating production facilities, of 99% at TEN and 95% at Jubilee.
Elsewhere, in Gabon operations delivered increased production volumes by 6,000 boepd.
Across its non-operated producing assets in Gabon and Cote d’Ivoire, Tullow averaged 17,600 boepd.
Work continues to farm-out in Kenya and, in Guyana, exploration activities continue as partner Repsol is presently drilling the Beebei-Potaro prospect on Tullow’s 37.5% owned Kanuku Block.
“A relentless focus on costs, capital discipline and operating performance is ensuring delivery of our business plan,” Dhir added.