Page 4 - LatAmOil Week 48 2020

LatAmOil COMMENTARY LatAmOil

(Image: Tullow Oil)

Tullow hoping for a comeback

Although the company’s new investment plan focuses on West Africa, it also

identifies new opportunities in East Africa and the Guyana-Suriname basin

TULLOW Oil (UK/Ireland) began 2020 on a at around $45 per barrel, significantly above
rough note after experiencing a series of diffi- the record lows it hit in April but still quite a bit
WHAT: culties in 2019. In January, it informed investors below the reduced figure of $65 per barrel that
Tullow intends to pump that it would have to take a charge of $1.5bn, or helped force a $1.5bn write-off.
more than half of its about $1.3bn after taxes. It made this announce- Meanwhile, Tullow’s debt portfolio has
investment budget into ment just a few weeks after the resignation of two swelled to around $3bn, and industry observers
Ghana next year. high-ranking executives, CEO Paul McDade have expressed doubt about its ability to make
and exploration director Angus McCoss. a scheduled repayment of $650mn in April
WHY: At the time, the company explained the 2022. The list of sceptics includes the Moody’s
The decision follows write-down by highlighting the “$10 per barrel ratings agency, which recently rated the compa-
multiple disappointments reduction in [its] long-term accounting oil price ny’s securities as Caa1, or seven levels into the
and setbacks in other
regions. assumption to $65 per barrel” and the reduction “junk” range.
of its estimates of proven and probable reserves Additionally, the firm has encountered more
WHAT NEXT: at a key licence area offshore Ghana. It also operational setbacks in South America and
The company is still acknowledged that it had experienced setbacks Africa. In early January, it revealed that it had
looking for low-cost ways in both of its main operating regions, Africa and discovered light crude oil in Carapa-1, an explo-
to identify attractive South America. ration well drilled at Kanuku, a block offshore
prospects in Guyana, Conditions have not necessarily improved Guyana operated by Spain’s Repsol. Around
Kenya and elsewhere. since then. Tullow, like nearly every other the same time, it opted to suspend its early oil
upstream operator in the world, has been under pilot scheme (EOPS) in Kenya, a tanker truck
strain as a result of the decline in oil markets that transport initiative that was floundering in the
followed the coronavirus (COVID-19) pan- wake of weather-related road damage. Later in
demic and the temporary lapse of the OPEC+ the year, it terminated EOPS and also decided
group’s production pact. Crude is now trading to delay exploration drilling offshore Suriname.

P4 www. NEWSBASE .com Week 48 03•December•2020