Tullow Oil has shifted its focus to West Africa, as it plans to invest $2.7 billion in Ghana’s oil fields, which form the backbone of its business. The move seeks to boost the firm’s cash generation as well as secure the group’s future.
According to the firm, they will be able to generate $7 billion of operating cash flow over the next decade, of which $2.7 billion will go to the oilfields in Ghana, while $4 billion will go towards servicing its $2.4 billion of net debt and shareholder returns.
Tullow expects to start a multi-well drilling program in Ghana in Q2 2021. As the Financial Times reports, the company has already produced 400 million barrels of oil from an estimated 2.9 billion barrels from its assets in Ghana.
In April this year, Tullow Oil agreed to sell its entire stake (33.3%) in the Lake Albert Development Project in Uganda to Total for $575 million, including the first oil contingent payments.
According to Tullow’s press release regarding the matter, the sale removed the company from all future capital expenditures associated with the project. Still, it retained potential benefits linked to production and the oil price through the contingent payments.
Again, in June, Tullow divested from Kenya’s oil, selling its rights as oil prices crumbled. This was after the company announced writing off $800 million of the costs of its exploration in Kenya & Uganda due to a lower oil price forecast and a reduction in reserves. Further, the firm announced plans to dispose of the entire 50% stake in the Turkana oil project.
Tullow’s production in 2020 averages 75,000 barrels per day.