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Investing.com -- Shares of Tullow Oil (LSE:LON:TLW) climbed 3.6% today despite the company reporting a net profit of $55 million for the fiscal year 2024, falling short of Visible Alpha consensus estimates of $179 million.
The miss was largely attributed to $213 million in exploration costs written off. Production for the year averaged 61.2 thousand barrels of oil equivalent per day (kboe/d), including 6 kboe/d of gas, which was a slight decline from the first half average of 63.7 kboe/d but in line with prior guidance. Year-end net debt stood at $1.45 billion, which was consistent with the forecast of approximately $1.4 billion after free cash flow (FCF) of $156 million.
For fiscal year 2025, Tullow Oil maintained its guidance, with a forecasted production range of 50-55 kboe/d and an anticipated FCF of $100-200 million at a Brent crude price of $70-$80 per barrel. This includes expected overdue gas receipts of $50 million from Ghana.
Capital expenditures are projected to be around $250 million, with decommissioning costs of approximately $30 million, general and administrative expenses of $40 million, and cash taxes estimated at $150-200 million within the same price range.
The company also announced an agreement for the $300 million sale of its Gabon assets to Gabon Oil Company, which is expected to reduce its net debt to $1.15 billion pro forma. The assets account for 10 kboe/d of the company’s FY25 production guidance and 36 million barrels of oil equivalent (mmboe) of proven and probable reserves.
Jefferies commented on the asset sale, stating, "We believe focus will be on the sale of Tullow’s Gabon assets for $300m net tax, which we estimate reduces FY26 FCF to $12m vs $139m presale, both at $70/b. Whilst the proceeds help reduce pro forma net debt to $1.15bn, stock performance will be further concentrated on Jubilee performance."
Looking ahead, Tullow Oil’s key operational focus remains on the Jubilee field, with a drilling program in Ghana set to commence in May 2025. Two new wells are expected to be operational in the third quarter of 2025.
Tullow continues its strategic review of the Kenya Field Development Plan, seeking government support and a long-term strategic partner to reach a final investment decision.
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