Page 5 - LatAmOil Week 48 2020

LatAmOil COMMENTARY LatAmOil

Some successes statement issued by Tullow before the Capital
Even so, the company is not struggling on every Markets Day event.
single front. In that statement, the company said that it
It has chalked up a few successes this year, was working to make the most of the “substan-
such as the finalisation of a farm-out transaction tial potential within [its] large resource base
worth $575mn with France’s Total. As a result of associated with its producing assets, where
that deal, it has been able to scale back opera- there is extensive infrastructure in place.” It also
tions in East Africa, a region where it has run up said it hoped to start realising that potential in
against many challenges. It also reported a profit the second quarter of next year, when it is due
and was able to meet production targets in the to launch the first phase of its investment pro-
first half of the year. gramme with a multi-well drilling programme
Additionally, it was quick to appoint Rahul offshore Ghana.
Dhir to the position of CEO, replacing McDade. The company continued: “In Ghana ... Tullow
And Dhir appears to be hopeful that the com- has produced just 400mn barrels of oil (gross)
pany is well on the way towards making up some from 2.9bn of oil in place (OIP, circa 14%).
of the ground it has lost over the last couple of This plan, alongside a rigorous focus on costs,
years, with the help of a new investment plan. is expected to generate material cash flow over
Tullow unveiled that plan last week during the next decade, which the group anticipates
a virtual Capital Markets Day event hosted by will enable reduction of its current debt levels
Dhir, along with CFO Les Wood, managing and deliver significant value for its host nations
director for Ghana Wissam Al-Monthiry and and investors, [as well as] production growth
human resources chief Julia Ross. It also said in in the medium term and the ability to sustain
a statement issued beforehand that it intended to production over the longer term. The first phase
focus on its oil-producing assets in West Africa. of investment will start in the second quarter of
2021, with the commencement of a multi-well
First priority: Ghana drilling programme in Ghana.”
And according to a Reuters report published Even so, Ghana and West Africa will not be
afterwards, the company’s strategy hinges on Tullow’s only target.
upstream development projects in offshore
Ghana. South America and East Africa
Tullow’s Ghanaian assets include Jubilee, one According to the statement, the firm is not
of the largest oil crude deposits discovered off giving up entirely on South America and East
the coast of West Africa since the turn of the cen- Africa.
tury, and Tweneboa-Enyenra-Ntomme (TEN), In Kenya, it has already begun the process
a block that is home to three oilfields. of re-assessing its upstream programme in the
Tullow acquired its stakes in these assets in hope of drawing up new production plans that
2004, via its purchase of South Africa-based remain viable when world oil prices are low. It
Energy Africa. Since then, the fields have has also teamed up with its joint venture part-
become its largest productive assets, but they ners to seek the Kenyan government’s permis-
have also been the source of some frustration. sion to extend their licences until the end of
Earlier this year, Tullow reported a decline 2021.
in reserves at Enyenra and said that Ghana In South America, meanwhile, it is work- Outside of
National Gas Co. (GNGC) was requesting lower ing to develop a better understanding of the Ghana, Tullow
volumes of associated gas from Jubilee and TEN. prospectivity of specific basins – especially the
Even so, it hopes to effect a turnaround “emerging basins” where it holds “substantial intends to focus
very soon. According to Reuters, Al-Monthiry acreage in Suriname, Guyana and Argentina,”
revealed that the company intends to spend the statement said. on “emerging
$180mn in that country in 2021, more than It is, for example, reviewing potential drilling
half of its total investment budget of $325mn. sites at the Orinduik block offshore Guyana in basins”
He also said Tullow would work to push associ- the hope of improving its chances of discovering where it holds
ated gas off-take levels at its Ghanaian fields up light sweet crude oil. It also intends to join Isra-
to more than 130mn cubic feet (3.68mn cubic el’s Ratio Petroleum and the other shareholders “substantial
metres) per day as of next year. in Block 47 offshore Suriname in spudding the
Over the long term, he added, the company Goliathberg-Voltzberg North-1 exploration well acreage in
will drill dozens of new wells offshore Ghana. It in the first quarter of 2021.
intends to sink 26 wells at Jubilee by 2030 and Even so, these initiatives will be smaller in Suriname, Guyana
will drill another 23 during the same period, he scale than Tullow’s plans for Ghana, which are and Argentina”
said. slated to absorb the majority of planned invest-
In the meantime, he noted, the company ments. They will also seek to minimise costs
will also take the floating production, storage outside of West Africa, the company said in its
and off-loading (FPSO) vessel that it is using to statement.
develop Jubilee offline temporarily for mainte- “Tullow has considerable opportunities
nance. He did not say how long the maintenance to unlock value in Kenya and South America.
period was anticipated to last. These require an innovative approach and a
deep geoscience and engineering expertise but
High-value assets do not require significant capital investment in
Al-Monthiry’s remarks are in line with the the evaluation phase,” it said. ™

Week 48 03•December•2020 www. NEWSBASE .com P5