Tullow Oil swung into a loss in 2023 after cutting the value of reserves in one of its West African oilfields, as its chief executive said the company would consider shareholder returns after 2025.
The London-listed company said on Wednesday it posted a $110 million loss after tax last year, compared with a profit after tax of $49 million in 2022.
The loss surprised analysts at Jefferies who had forecast a profit of $257 million in 2023.
The company booked some $435 million in impairments and write-offs, including over $301 million for reduced reserves at its TEN oilfield in Ghana amid investment delays.
Shares in the company fell, hitting their lowest since June.
However, daily output from its newly expanded Jubilee oilfield in Ghana rose over 100,000 barrels in the second half of 2023, and Tullow expects to keep producing between 90,000 and 110,000 barrels per day towards the end of the decade.
The company generated around $170 million in free cash flow last year, ahead of the $150 million guidance but below the $267 million generated in 2022, and cut net debt to $1.61 billion from $1.86 billion in 2022.
"We've got an opportunity to invest both organic and inorganically within our portfolio, and also at the same time, start to consider shareholder returns in the post-2025 timeframe," Chief Executive Officer Rahul Dhir told Reuters.
The Africa-focused oil producer expects to generate more than $600 million in free cash flow in 2024 and 2025. Its market capitalisation stood at $410 million as of March 6.
Since Dhir took over as CEO in July 2020, Tullow has emerged from a financial overhaul with a $1.8 billion bond sale and a new business plan.
The company has focused on reducing debts, significantly cut capital allocation to long-cycle projects, and raised over $700 million through sales of interests in Uganda, Equatorial Guinea, and Gabon.
In 2023, production was pegged at around 62,700 barrels of oil equivalent per day (boe/d) and 2024 output was forecast between 62,000 and 68,000 boe/d.
Its turnover declined to $1.63 billion last year, from $1.78 billion in 2022. It would have been $139 million higher without hedges.
The company expects $250 million of capital expenditure in 2024, compared with $380 million last year. About 60% of the capital costs this year will be allocated to Jubilee.
Tullow also reiterated its guidance for $200-300 million of free cash flow this year at the $80 a barrel level for crude, largely driven by the timing of revenue receipts for 18 to 19 cargoes lifted in Ghana during the year.
In November, Tullow signed a $400 million five-year debt deal with Glencore to help manage its senior notes maturing through 2026 and will see the trading house take over marketing the crude from its flagship Ghana oilfields.
(Reuters - Reporting by Deep Vakil and Ron Bousso; editing by Miral Fahmy and Louise Heavens)