Revenue at Tullow for 2017 expected to be around $1.7bn
Anglo-Irish exploration firm Tullow Oil expects to report revenue of around $1.7bn (€1.4bn) for 2017, an increase on the $1.27bn in revenue generated in 2016.
Gross profit at the exploration company is expected to be in the region of $800m (€670m), according to the latest trading update from the company.
The group also expects to have generated $0.5bn of free cash flow, significantly exceeding the forecast at the start of the year. This increase is primarily due to strong production performance, rigorous cost discipline and a rising oil price, the company said in its trading update.
The free cash flow has enabled ongoing debt reduction, and Tullow expects year-end net debt to be $3.5bn, a reduction of over $1.3bn over the course of 2017.
“Tullow delivered strong operational and financial performance in 2017 against the backdrop of continued industry volatility,” Paul Mcdade, CEO of Tullow Oil, said.
During the year Tullow's West Africa oil production exceeded expectations for the year averaging 89,100 barrels of oil per day, including 7,400 barrels of oil per day of net production-equivalent payments received under Tullow's insurance for the Jubilee field.
In Europe, working interest gas production performed in line with expectations with full year net production averaging 5,600 barrels of oil equivalent per day.
Looking to this year, working interest oil production, including production-equivalent insurance payments, is expected to average between 82,000 and 90,000 barrels of oil per day.
Working interest gas production, which includes TEN associated gas sales and the impact of the Netherlands assets sales in 2017, is expected to average between 3,500 and 4,500 barrels of oil equivalent per day. This brings Tullow’s overall group production guidance in 2018, for both oil and gas, to between 86,000 and 95,000 barrels of oil equivalent per day.
“Over 2018 we expect to continue [the] positive momentum. With our diverse low-cost assets and high-graded exploration portfolio, enhanced by recent licence additions in Côte d'Ivoire and Peru, we have a strong foundation to grow the business and further reduce our debt," Mr Mcdade said.
In November Tullow announced that it had completed the refinancing of $2.5bn of Reserves Based Lending ("RBL") credit facilities.
The transaction, which was formally launched in early October last year following the resolution of the Ghana – Ivory Coast border dispute, was materially over-subscribed and extends the maturity of the group's existing RBL credit facilities.
Tullow also decided to reduce the commitments of its revolving corporate credit facility to $600m from $800m, ahead of the scheduled amortisation in January 2018.
As of year-end 2017, Tullow had total headroom including free cash of $1bn with no material near-term debt maturities.