Tullow's TEN to see first oil in Q3

Tullow Oil’s TEN project is more than 85% complete and is set for production start-up between July and August 2016, which will help the company drive further reductions in operating costs and capital expenditure.

Image from Tullow.

Major milestones for TEN were achieved in 2015, including the sailaway of the FPSO from Singapore on 23 January.

In 2015, production across the group was in line with expectations. West Africa working interest oil production averaged 66,600 b/d. In Europe, gas production averaged 6800 boe/d. Average working interest production guidance for 2016 from West Africa and Europe is 73,000-80,000 b/d and 5000-7000 boe/d respectively. This includes production in 2H 2016 from the TEN development as it gradually ramps up following first oil.

In 2015, Tullow’s operating costs per barrel in West Africa remained low averaging US$10/bbl for Jubilee and $15 bbl across the West Africa non-operated portfolio.

The Greater Jubilee full field development (GJFFD) plan was submitted to the government of Ghana in December. The plan, which intends to extend production and increase commercial reserves, has been redesigned given the current environment to reduce the overall capital requirement and allow flexibility in the timing of the investment.

In East Africa, a draft field development plan was submitted to the government of Kenya in December 2015 and this will inform discussions as Tullow and its partners progress towards potential FID of both the Kenya and Uganda upstream development projects.

Tullow’s 2015 financial results delivered solid revenue and pre-tax operating cash flow of $1.6 billion and $1 billion respectively, down on 2014, reflecting the significant fall in commodity prices over the year.

Revenues and cash flow were supported by the company’s hedging program. The group reported a loss after tax of $1 billion following write-downs exacerbated by lower oil prices. These included an exploration pre-tax write-off totaling $749 million, a pre-tax impairment charge of $406 million and an onerous service contract charge of $186 million as a result of much lower levels of exploration and appraisal drilling activity planned for 1H 2016.