Independent explorer Tullow Oil has returned to a profit and is looking forward to first production on its TEN project offshore Ghana next month, on schedule, and focusing its exploration efforts on South America.
TEN, a floating production, storage and offloading (FPSO) project, using the Prof. John Atta Mills, FPSO, will boost the firm's net production by about 60%, when it reaches facility capacity, helping further boost the firm's cash flow.
The firm is also expecting to see higher production from its nearby Jubilee field, also produced using an FPSO, at 85,000 b/d, after initiating new procedures required following issues with the vessel's turret. Work spread mooring the vessel has started.
While Tullow's 1H revenues dropped 34%, to US$541 million, compared to $820, in the 1H 2015, profit after tax stood at $30 million, compared to a loss of $68 million in 1H 2015.
Tullow is planning to spend its cash deleveraging its balance sheet and on exploration, with a focus on South America.
In early 2016, Tullow increased its acreage position in the Guyana basin with the award of the Orinduik license, immediately up-dip of the significant Liza-1 oil discovery made by Exxon in 2015. A 3D seismic survey is planned on both the Kanuku and Orinduik licenses in 2017.
Tullow plans to start a drop core geochemical survey in Suriname in September 2016, to sample the seabed in Blocks 47 and 54 to test shallow hydrocarbon indicators. Results of the 3D survey completed in the first half of the year over Block 54 indicate a number of highly attractive leads and prospects, in particular the Araku prospect, says Tullow.
In January 2016, Tullow farmed down a 35% working interest in Block 15 in Uruguay to Statoil, with government approval received and completion taking place at the end of May. The partners have agreed a one-year extension with the government on the block in order to acquire 2500sq km of new 3D seismic and this activity will start in late 2016.
The interpretation of this is expected to add to the number of leads already identified in a 3D survey undertaken by Tullow in 2013. Leads in the under-explored Pelotas Basin, in the north-eastern part of Block 15, are particularly well located for potential oil charge.
Tullow has decided to exit the deepwater Guyanne Maritime Block in French Guiana, however.
In Jamaica, a 2D seismic survey has been completed over the 32,056 sq km offshore Walton Morant license. The results of the survey are currently being analysed to delineate potential plays in shallow water.
Aidan Heavet, Tullow's CEO, says: “The start of production from the TEN field in early August will be transformational for the Group allowing us to significantly increase our net production and begin the process of deleveraging our balance sheet. This project has remained on schedule and on budget since the day the plan of development was signed and demonstrates our ability to deliver complex projects of this nature. The benefits of last year’s cost-cutting program are evident in the financial results, the significant TEN capital expenditure is largely behind us and we have also made good progress on the Jubilee Turret Project. Tullow is therefore well placed to move forward with a restructured and more efficient business that can deliver growth from its portfolio of high quality, low cost producing, development and exploration assets.”
Read more
Subscribe
