LONDON (ShareCast) - (Sharecast News) - Tullow Oil reported that output was in-line with expectations during the first half of the year, but "narrowed" its guidance for full-year output and lowered its forecasts for oil prices both in the near-term and when looking further out.
The group's working interest production averaged 77,700 barrels of oil equivalent per day during the first six months of the year, as expected, but said full-year output was now seen at between 71,000-78,000 bopd.

As recently as 23 April, Tullow had been anticipating full-year production of 70,000-80,000.

Management also lowered their view on the long-term price of oil from $65 per barrel to $60, which would result in "material" impairment and exploration 'write-offs' on the value of some of the assets on its balance sheet of $1.4-1.7bn on a pre-tax basis.

At the current forward oil price curve for oil, the company expected to be breakeven on a free cash flow basis for the year.

Guidance for capital expenditures and decomissioning costs in 2020 were steady at about $300m and $65m, respectively, against the comparable year earlier values of $192m and $38m.

Tullow also reported that it had hedged 60% of its 2020 sales with a floor for the price of oil of $57 a barrel and 44% of its 2021 revenues at a floor of $51.

The Covid-19 impact did not have any impact on operations, the company added, although in combination with the country's fiscal framework, it had forced Tullow to declare 'force majeure' on its licenses, although "constructive" discussions with Nairobi were ongoing.

Net production at the Jubilee field was pegged at 30,000 bopd for the half, together with a further 24,000 bopd from TEN and 23,700 bopd from its non-operated portfolio.

Operational performance in Ghana meanwhile was described as "strong", with uptime on its two floating production storage and offloading vessels above 95% and with the Ntomme-9 production well at TEN due onstream in August.

In Suriname, drilling at the Goliathberg-Voltzberg North prospect (GVN-1) in Block 47 was scheduled for the first quarter of 2021.

Net debt as of 3 June stood at about $3.0bn with liquidity headroom and free cash standing at near $500m.

As of 0916 BST, shares of Tullow Oil were down 4.36% to 26.75p.

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