Tullow Oil aims to maximize West Africa output to cut debt below $1B.Tullow Oil is focusing on maximizing production in Ghana to cut debt below $1 billion. Former CEO Rahul Dhir shifted the company from exploration to established assets, reducing net debt from $2.81B to $1.45B.
In 2024, lower output hurt profits, but a $300M Gabon asset sale boosted investor confidence, lifting shares 7.6%. Tullow plans to drill two Jubilee wells in May to slow decline. Interim CEO Richard Miller reaffirmed confidence in Jubilee’s cash flow potential once debt targets are met.
Tullow Oil has been steadily reducing its debt, accumulated during its earlier years as an aggressive explorer. Former CEO Rahul Dhir, who stepped down earlier this year, reshaped the company’s strategy to focus on maximizing production from established assets in Ghana rather than engaging in costly and high-risk exploration. This shift aimed to stabilize the company’s finances and create a more sustainable business model.
Looking ahead, Tullow stated on Tuesday that its main priorities for the year include advancing its refinancing plan and optimizing production activities at its key Ghanaian fields, Jubilee and TEN. However, weaker-than-expected output from certain fields in 2024 significantly impacted annual profits, which fell to less than a quarter of what analysts had projected.
Despite this, investors reacted positively to Tullow’s recent $300 million agreement to sell assets in Gabon, announced on Monday. Following the news, the company’s stock surged by as much as 7.6% on Tuesday, while its bonds also saw an uptick. Analysts view the asset sale as a crucial step in Tullow’s broader strategy to reduce net debt to below $1 billion and restructure its capital.Production levels in 2024 were lower than the previous year and are expected to continue declining.
To counteract this, Tullow plans to drill two additional wells at the Jubilee field, starting in May, to help slow down the natural decline in output.Interim CEO Richard Miller reaffirmed confidence in the long-term potential of the Jubilee field, emphasizing that it will generate strong cash flows and provide flexibility for returns and future growth once the company achieves its debt reduction target of under $1 billion.Under Dhir’s leadership, Tullow successfully cut net debt from $2.81 billion to $1.45 billion, marking significant progress in the company’s ongoing financial restructuring efforts.
