Tullow Oil’s Share Price Edged Up 3.41% on Latest Trading Update

The Tullow Oil plc (LON: TLW) share price edged 3.41% higher after issuing its latest trading update. The company announced several updates regarding its business performance and full-year guidance for 2023. The updates reflect the firm’s ongoing commitment to financial strength, operational excellence, and strategic growth.

The oil company revised its full-year 2023 free cash flow guidance from approximately $100 million to around $150 million. The significant increase is primarily attributed to rising sales volumes in Gabon and the prudent deferral of certain capital expenditures.

Tullow Oil is in a robust debt position and anticipates its year-end net debt to be approximately $1.6 billion, with a gearing ratio of 1.3 times. These figures surpass our earlier guidance, underscoring our efforts to manage our financial obligations efficiently.

The company’s capital expenditure for the entire year is expected to decrease to approximately $370 million, down from the initial estimate of $400 million. The reduction is achieved through deferrals and cost-saving measures, while the decommissioning expenditure remains steady at around $70 million.

Although the firm’s full-year net oil production is projected to be slightly below the guidance range of 58-60 thousand barrels of oil per day (kbopd), there are valid reasons for this. Delays in the Jubilee South East schedule and reduced water injection have impacted production. 

The company recently brought two Jubilee water injection wells online to bolster its production capacity in October. Three additional wells, consisting of two producers and one water injector, are slated for drilling before the year's end, with plans for tie-in during the first half of 2024.

The company also announced a new tender offer for holders of its 10.25% senior secured notes due 2026 bearing ISIN: USG91237AB60 and CUSIP: G91237AB6 (the “Reg S Notes”) worth up to $100,000,000. 

Rahul Dhir, Tullow Oil’s CEO, commented: “As we approach the end of the year, Tullow's financial position continues to improve. The $400 million debt facility agreed with Glencore is a material step in our refinancing strategy and demonstrates Tullow's continued ability to access long-term capital. With Jubilee South East onstream, our portfolio is generating increased free cash flow, which is accelerating our deleveraging, and we remain on track to deliver c.$800 million of free cash flow between 2023 and 2025.”

Tullow Oil share price. 

The Tullow Oil share price edged 3.41% higher to trade at 34.84p from Tuesday's closing price of 33.69p.