Tullow Oil will emerge from an intensive development phase once key growth asset TEN is brought onstream in July/August 2016. Tullow's near-term focus will turn to debt reduction, but longer-term investment priorities are unclear.
Using GEM and Upstream Asset Valuations, our latest Corporate Report focuses on how Tullow Oil had to take drastic measures to ensure that it could continue to fund the development of its key growth asset, TEN. With TEN expected to begin production in the coming months, we expect the company to make further progress in resetting its strategy. But what else stands in the way?
FPSO issues at its flagship asset, Jubilee
Tullow announced an issue with the external turret on the Jubilee FPSO with force majeure subsequently declared on two oil cargoes. Following a planned shutdown in March, the company will be hoping to ramp-up to previous production rates. But longer-term growth in Ghana is unclear. Further development at Jubilee is subject to Ghanaian Government approval, and the continued border dispute between Cote d'Ivoire / Ghana is also presenting drilling challenges at TEN.
Project sanctions in East Africa
With the choice of export route through Uganda and Kenya politically sensitive, progress towards project FID is being delayed. Tullow is also looking for a partner(s) to carry it through to first oil.
Two questions remain: When will Tullow return to exploration?
Exploration continues to be a low priority, with activity limited to refocusing the portfolio on the most competitive positions in anticipation of an uptick in oil prices. But a return to higher levels of exploration investment depends on reducing development commitments in East Africa.
And when will the dividend be reinstated?
Our Tullow Oil corporate - global upstream portfolio analysis provides an overview of the company's global upstream assets.
Demonstrating a degree of resilience against lingering weak commodity prices, Tullow reported a headline post-tax loss of US$1 billion for FY2015. Find out why in our Reported Results Analysis.