Tullow Posts Big 1H Loss, After Ghana Impairment

Tullow Oil posted a net loss in first half 2017 of $309mn after impairments, it said July 26, contrasting with its 1H 2016 net profit of $30mn.

The latest result was net of a big impairment charge on its new offshore Ghana oil field. More positively, that field has now piped gas ashore.

The UK-listed mainly Africa-focused oil and gas producer – which made a 1H 2017 pre-tax profit of $303mn, up 66% – booked impairments of property, plant and equipment for the period totalling $642mn – including a charge of $572mn associated with its operating stake in Ghana’s offshore producing TEN oil and gas field. It also wrote off $4mn of exploration costs, chiefly in the Netherlands.

At TEN, Tullow said production levels in excess of 50,000 barrels of oil/day (at 100%) had been achieved recently, with the field's floating production ship (FPSO) achieving 100,000 boe/d in a recent 24-hour test. Tullow noted: “The testing however identified an issue with the FPSO’s flaring system which has been addressed but required a 10-day shutdown of the facility; final commissioning is expected to be completed in 2H 2017.” 

Tullow added that the gas manifold at the TEN field is now installed and commissioned, and a gas export trial to GNGC facilities onshore has been successfully completed.

Tullow said its West Africa net working interest oil production (including production-equivalent insurance payments at Ghana’s Jubilee field) averaged 81,400 b/d, with full year guidance unchanged at 78-85,000 b/d. Repairs to a turret on the Jubilee FPSO, also Tullow-operated, were “making good progress.”  Preparations to drill new production wells at TEN later this year are underway, but actual drilling must await an arbitration decision due later this year from the International Tribunal for the Law of the Sea (ITLOS) between Ghana and its western neighbour Cote d’Ivoire on their maritime border dispute.

Offshore Mauritania, a 600 km² 3D survey of Block C18 has been completed and a further 3D survey in Block C3 to cover new shallow water plays will start September 2017, Tullow said.

Mark Smedley