Tullow to sustain African oil production through asset rejuvenation, CEO says

Paul Burkhardt, Bloomberg October 11, 2023

(Bloomberg) – Tullow Oil Plc can sustain oil production at its West African hub through the next decade by focusing on asset rejuvenation, according to Chief Executive Officer Rahul Dhir.

“I think we have line of sight” at being able to keep production above 100,000 bopd “for the foreseeable future,” Dhir said in an interview on the sidelines of the Africa Oil Week conference in Cape Town on Wednesday.

Tullow has shifted its focus since Dhir took over as CEO in 2020, shedding its identity as a frontier operator and prioritizing debt reduction and operational efficiency. Oil output from its main asset, Ghana’s Jubilee field that started production about 12 years ago, jumped in July after a second well was brought online as part of a development program concentrated on the company’s established assets.

Another offshore area in West Africa, the TEN project, will become “a major source of gas supply for Ghana through the rest of the decade and beyond,” following approvals and a gas sales agreement, Dhir said.

As these strategic changes have taken hold, investors “now understand it’s a different company and are starting to come back,” Dhir said. Tullow’s bonds have also traded higher in evidence that “you’re getting new investors who are showing up in a different part of the capital structure.”

Tullow shares have climbed by almost 50% since mid-May, tracking a recovery in crude prices, but remain 19% lower than a year earlier.

The shift in emphasis from wildcat exploration to the rejuvenation of existing fields could serve Tullow well as the world’s biggest oil companies transition to cleaner energy, according to Dhir. “That skill-set becomes very relevant as the majors are exiting the mid- to late-life assets.”

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