Tullow Oil returns to border drilling

Tullow Oil has put border exploration back on the agenda after the UK-listed company announced strong free cash flow and higher cash flow. first half.

"We are determined to return to high-impact drilling," said Paul McDade, General Manager of Tullow.

The company, which also says goodbye to its retiring founder Aidan Heavey, plans to drill the wild Cormorant off Namibia in September. The drilling will begin a new campaign that will allow Tullow to spend $ 150 million on exploration each year to drill three to five border wells each year until 2021.

By 2019, Tullow will initially focus on its acreage off Guyana. The small South American country has attracted the attention of the industry following a series of discoveries by ExxonMobil. The US major has increased its estimate of recoverable resources discovered for the offshore Stabroek Block Guyana to more than 4 billion barrels of oil equivalent.

million. McDade said Tullow had the potential to generate up to $ 650 million of free cash flow in 2018, supported by strong production in its West African operations and rising oil prices . The company, which said free cash flow had almost doubled to $ 401 million in the first half, had considered paying an interim dividend. He concluded that "at the moment, free cash flow is best used to continue paying off debt and investing in assets".

Tullow's net debt of $ 3.1 billion was slightly below analysts' expectations for the first half. McDade said the company did not need to meet its $ 2.5 billion general net debt target to restore payments.

The company returned to profit in the first half thanks to strong production from its operations in West Africa. It generated an after-tax profit of $ 55 million for the period, up from a previous loss of $ 348 million. Gross profit jumped 70% to $ 521 million. Revenues for the six months ending at the end of June were $ 905 million, up from $ 788 million.

The company has increased its production forecast for the entire year between 89,000 and 95,000 barrels of oil equivalent per day.

Tullow's West African operations, which include the Jubilee and TEN fields, generated $ 900 million in revenue and contributed $ 500 million to gross margin and $ 400 million to free cash flow.

Tullow, who recently lost a lawsuit against the owner of the rig, Seadrill, in a dispute over the conclusion of a drilling contract in Ghana, said he had decided not to not appeal this decision.

Analysts at RBC Capital Markets said: "The platform dispute was an unwanted inconvenience and we expect investors to be ready to deliver, especially the completion of the sale in Uganda and the result of the wildcat Cormorant off Namibia … "

Dorothy Thompson, formerly chief executive of Drax, the electricity company, succeeded Heavey as president earlier this month. Mr. Heavey founded the company 32 years ago.

Tullow shares were up from just under 2% to 221p in the early afternoon.