Tullow Offers Operational Update for 2016, Guidance for 2017
London-based oil and gas producer, Tullow Oil Plc TUWOY recently issued a statement regarding its operational activities. The company also provided a financial update for 2016 along with issuing guidance for 2017. Following the Annual General Meeting on Apr 26, the company plans to appoint Paul Mc Dade as the new CEO replacing Simon Thomson.
Operational Update
Tullow’s 2016 oil production in West Africa was well aligned with its guidance averaging 65,000 barrels of oil per day (bopd), including 4,600 bopd of production-equivalent payments obtained from Tullow’s Business Interruption insurance policy for Jublilee field. Gross production from Jubliee amounted to 73,700 bopd and production of gas in Europe amounted to 6,200 boepd, which was also in line with the estimates.
Financial Update
Tullow Oil improved its debt and liquidity position with free cash of $1 billion and net debt of $4.8 billion. This was due to efficient capital capex and cost management as well as improved cash inflows. For 2016, the company estimates its total revenue to amount to $1.3 billion with gross profit of $500 million. The revenues included $363 million from the oil and gas hedge program of the company.
Estimates and Plans for 2017
West Africa oil production, including production-equivalent payment, is estimated to fall within the range of 78,000–85,000 bopd. Total gas output for Europe is expected to be around 6,000–7,000 barrels of oil equivalent per day (boepd).
Preparation for drilling the potential Araku prospect are under way and is scheduled to be completed within the second half of 2017 along with the acquisition of 3D seismic data in Guyana. With the divestment of Norway business, three more divestments are also progressing well and are expected to be executed in the first half of 2017.
The company is planning to reduce its capex for 2017 by 44% from $900 million to $500 million, of which $30 million is attributed to West Africa capex, $100 million is directed towards Kenya pre-development expenditure and $125 million for appraisal and exploration expenses. Ghana and Uganda capital expenditure is estimated to around $90 million and $125 million respectively.
Zacks Rank and Key Picks
An independent multinational oil and gas exploration and production company, headquartered in London, and concentrating its largest activities in Africa and Atlantic margins, Tullow Oil Plc currently carries a Zacks Rank #3 (Hold).
The company has outperformed the Zacks categorized International Oil And Gas Exploration & Production industry over the prior three months. During the aforesaid period, Tullow Oil shares improved almost 9% while the broader industry gained around 3%.
Better ranked players in the industry include Bellatrix Exploration Ltd BXE, Rice Midstream Partners LP RMP and Now Inc. DNOW. All these companies carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
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