UK-based Tullow Oil has unveiled a new plan to focus 90% of its future capital expenditure (CAPEX) on its producing assets in West Africa.
Currently, the company’s production assets in the region are located offshore Ghana, Gabon, Cote d’ivôre, and Equatorial Guinea.
The company said that its new strategy and plan will focus on the considerable potential within its resource base associated with its producing assets where extensive infrastructure is available.
Tullow Oil CEO Rahul Dhir said: “Since joining Tullow in July 2020 I have been deeply impressed by the strength of the Group’s assets, especially in Ghana. Following hard work by our team, and with input from our partners and external experts, we have a clear strategy and plan for the next 10 years.
“The plan focuses our capital on a deep portfolio of short-cycle, high-return opportunities within our current producing asset base and will ensure that Tullow can meet its financial obligations and deliver material value for our host nations and investors.”
Over the next decade, the company expects to generate nearly $7bn of operating cashflow.
Tullow Oil also disclosed plans to invest around $2.7bn from 2021 and 2030 and make close to $4bn cash flow available for reducing debt and for shareholder returns.
The company further stated that the new plan will yield production growth in the medium term and also enable it to sustain production levels over the longer term.
It will begin the first phase of investment in the second quarter of 2021 by launching a multi-well drilling programme in Ghana.
Tullow Oil also revealed that the evaluation phase of its Kenyan and South American assets does not require a significant capital investment. Instead, the company will look to use an innovative approach and its expertise in geoscience and engineering to unlock their value.
In Kenya, the company has been engaged in re-evaluating Project Oil Kenya for designing an economic project at low oil prices while retaining the phased development concept.
In South America, Tullow Oil will focus on getting a better understanding of the prospectivity of the basins in Suriname, Guyana, and Argentina where its assets are located.
Recently, the company sold its assets in Uganda, including its stake of 33.3% in the Uganda Lake Albert project, to Total, for $575m.
Tullow Oil said that it will continue to assess sale of additional assets if they are value accretive and can make its balance sheet stronger.
However, the company said that currently there isn’t much urgency to sell additional assets because of the material cost savings it has realised and the cash flow generation from the newly unveiled plan.
