Tullow Oil ups 2022 free cash flow outlook, Ghana tax looms

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LONDON — West Africa-focused oil producer Tullow sees its 2022 free cash flow at $267 million, slightly ahead of previous guidance and up from $245 million the previous year, it said in a trading update on Wednesday.

It plans to invest $400 million this year, mainly on its flagship fields in Ghana, expecting free cash flow to come in at $100 million at an oil price of $80 a barrel, or twice that at $100 a barrel.

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Tullow faces a 2023 group cash tax bill of at least $300 million at an oil price of $80 a barrel, up from $230 million last year, as tax incentives in Ghana are running out, a spokesperson said.

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It believes the “assessments are without merit” and is engaging with Ghana’s government to resolve the dispute, it said.

Cost cuts and a focus on its fields in Ghana led Tullow to guide for $700-$800 million in free cash flow for the 2024-2025 period, if an oil price of $80 a barrel is realized.

It said it had hedged 33,100 barrels per day (bpd) of this year’s output and 11,300 bpd of 2024’s production at between $55 and $75 a barrel.

After hedging, Tullow achieved an average of $87 per barrel in 2022, it said.

This year it expects to produce between 58,000 and 64,000 bpd, broadly in line with 2022.

Net debt at Tullow, which has a market capitalisation of around $648 million, went down to $1.9 billion at end-2022.

It is due to report full-year results on March 8. (Reporting by Shadia Nasralla; editing by Jason Neely and Louise Heavens)

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