Tullow Oil focuses on Ghana as part of debt reduction strategy

(Bloomberg) – Tullow Oil Plc will pump as much as it can from mature assets in West Africa this year as part of plans to bring debt below $1 billion.

The company has been chipping away at borrowings accumulated during its days as a free-spending wildcatter. Former CEO Rahul Dhir, who left earlier this year, retooled the producer to focus on established assets in Ghana rather than extensive exploration in an effort to shore up finances.

“In the year ahead, our priorities are to progress our refinancing plan” and “optimize our production activities at Jubilee and TEN” in Ghana, Tullow said Tuesday in a statement. Disappointing output from some fields in 2024 weighed on annual profit, which was less than a quarter of average analyst estimates.

Yet investors were encouraged by a $300 million agreement to divest assets in Gabon, announced Monday. Tullow shares jumped on the news and extended gains on Tuesday, climbing as much as 7.6%. The company’s bonds also rose.

“This marks another stage of delivery in management’s plan to reduce net debt towards a target of under $1 billion and refinance its capital structure,” James Hosie, an equity analyst at Shore Capital, said in a note to clients. 

Production in 2024 was lower than a year earlier and will continue to slide. Tullow expects to drill two new wells at the Jubilee deposit, starting in May, to curb natural decline.

“We have absolute confidence in the Jubilee field to deliver material cash flows and provide the business with optionality for returns and growth, once our net debt target of below $1 billion is reached,” interim CEO Richard Miller said.

Dhir reduced net debt to $1.45 billion from $2.81 billion during his tenure.