Tullow Oil said it is weighing asset sales to accelerate the reduction of its net debt pile to below $1 billion (€960 million), after unveiling disappointing oil production and cash flow forecasts for this year.
The Irish founded, Africa-focused exploration company said in a statement on Thursday that it will only consider the sale of “certain noncore assets” where the proceeds would boost both the group’s equity level and lower its debt burden relative to earnings.
The move also comes Tullow is widely expected to try to this year to refinance a $1.4 billion bond ahead of it falling due for redemption in May 2026.
“Over the last four years, through our commitment to operational excellence and prudent implementation of efficiencies we have continued to generate free cash flow and have significantly reduced our net debt from circa $2.81 billion to circa $1.45 billion,” said chief executive Rahul Dhir, who announced last month that he is stepping down.
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“Our improved balance sheet, alongside the extension of our revolving credit facility, positions us well as we look to manage our debt maturities and optimise the group’s capital structure in 2025.”
Trading in Tullow shares was volatile on Thursday morning as investors digested the asset sales plans along with a lower-than-expected production and cash flow forecast from the company.
[ Tullow shares soar as Ghana tax victory will help $1.4bn debt refinancingOpens in new window ]
Tullow generated $156 million in free cash flow – or money that is left over after capital investment – in 2024.
Davy analyst Colin Grant said the figure was below his $215 million estimate, partly due to delays in gas receipts in Ghana, home to Tullow’s main producing assets, the offshore Jubilee and TEN oil and gasfields.
In 2025, Tullow expects group working interest production of 50,000-55,000 barrels of oil equivalent per day (BOEPD), including 6,000 boepd of gas.
“The midpoint of the guidance implies 46,500 BOEPD of oil production, which would be a decline of 15 per cent year-on-year and 11 per cent below our forecast,” said Mr Grant, noting that planned a two-week maintenance shutdown on the Jubilee field will have a 4 per cent impact on production.
The group expects to generate free cash flow of $200 million in 2025 based off a forecast that the price of oil will average $80 per barrel. However, this includes $50 million of gas receipts carried over from 2024.
“It is below our forecast of $260 million due to the lower than expected production,” said Mr Grant.
Tullow has $493 million of bonds falling due in March. The company said it expects to repay this with a combination of cash in hand and drawing down of loans from a facility agreement with commodities trading group Glencore.
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