Tullow Oil LON: TLW said strong production performance, high realized oil prices and progress on Ghana receivables led it to raise its 2026 free cash flow guidance, while the company also outlined expanded drilling and exploration opportunities around its Jubilee and TEN fields.
Chief Executive Officer Ian Perks said the company’s operational improvements were continuing to produce “positive results,” with first-half production performance supporting confidence that Tullow will finish 2026 at the high end of its 34,000 to 42,000 barrels of oil equivalent per day guidance range.
Chief Financial Officer Richard Miller said first-half production totaled 43,700 barrels of oil equivalent per day, up more than 7% from the same period in 2025. Tullow’s new wells came online on or ahead of schedule and met or exceeded initial production expectations, while optimization efforts, lower well downtime and high facility availability supported output.
Operations support higher outlook
Perks said the 2025-26 drilling campaign, which included seven wells, had been completed on time and on budget. The final well, a water injector, came online during the month of the presentation. He said accelerated processing of 4D seismic data helped de-risk the campaign, including prompting the company to change the location of one well.
Combined uptime at the Jubilee and TEN floating production, storage and offloading vessels exceeded 99% in the first half. Tullow attributed the result to maintenance work, improved instrument reliability, power monitoring, a spare-parts strategy and changes to well and riser configurations.
Water injection capacity was increased to 300,000 barrels per day in 2025, above the company’s 230,000 barrel-per-day target injection rate. Although unplanned downtime affected injection volumes during the second quarter, Perks said Tullow remains on track to reach its full-year target and expects 2026 to deliver the highest water-injection levels achieved at Jubilee.
The company also said production had remained strong in the third quarter. Perks cautioned, however, that it would be unrealistic to expect facility availability to remain at 99% indefinitely.
Cash flow guidance upgraded
Tullow raised its 2026 free cash flow guidance to between $170 million and $250 million, from a prior range of $70 million to $175 million. Miller said the revision reflected better production performance, stronger oil-price realizations and progress collecting amounts due from the government of Ghana.
First-half operating cash flow was $222 million. Free cash flow was $4 million, which Miller said reflected $70 million of one-off refinancing costs, capital spending weighted toward the first half and six cargoes lifted during the period, compared with eight cargoes expected in the second half.
Capital expenditure guidance remained $200 million for the full year. Tullow reduced its expected decommissioning spending to $15 million from $25 million after deferring contributions to the TEN decommissioning fund.
The company realized an average price before hedging of $95 per barrel in the first half, including a cargo delivered in April that achieved approximately $130 per barrel, its highest price for a Tullow cargo. Miller said four cargoes lifted so far in the second half also averaged $95 per barrel, including one priced at $119 per barrel. Tullow expects to lift another four cargoes before year-end.
Miller said pricing for prompt physical deliveries had at times diverged sharply from front-month futures prices. With four cargoes still to be priced, he said every $10-per-barrel increase above the guided oil-price range in the second half would add more than $20 million of cash flow.
- Net cash general and administrative costs are 50% lower than two years ago, according to the company.
- Tullow is targeting an annual net cash G&A run rate of $20 million.
- The company expects additional cost reductions after purchasing the TEN FPSO, a transaction planned for early 2027 that is expected to eliminate its annual lease cost.
Debt and refinancing plans
Tullow completed a comprehensive refinancing in April, extending the maturity of its senior secured notes to 2028 and Glencore debt to 2030. The transaction also included a $100 million new-money cargo prepayment facility with Glencore.
The company said the refinancing lowered cash interest costs by more than $50 million annually through paid-in-kind and pay-if-you-can interest structures. Tullow repaid $48 million of bonds in June and expects another repayment in November. It forecast year-end net debt of $1.2 billion, including accrued paid-in-kind interest on its bonds and Glencore notes.
Miller said Tullow aims to secure a longer-term refinancing during the second half of 2026. The company is initially considering a trader-supported financing solution and bank financing that could create what Miller described as a more traditional European exploration and production capital structure.
Tullow maintained its hedging policy, targeting 60% downside protection while seeking to keep at least 60% of output exposed to higher oil prices. Miller said the company uses puts, collars, three-way structures and, at times, put spreads, and has not entered into swaps.
Ghana growth opportunities and tax discussions
Tullow reported reserves replacement of about 380% at midyear, including more than 420% at Jubilee and more than 170% at TEN. The company said the additions reflected Petroleum Agreement extensions, maturing future drilling campaigns and progress on the TEN gas development.
Perks said the 4D seismic review identified near-field potential in deeper horizons around Jubilee and TEN, including Lower Mahogany and the deeper Cenomanian play. These opportunities remain in Tullow’s upside case because they require further technical work and, in some cases, additional rights from the Ghanaian government.
Rather than committing major exploration capital immediately, Tullow said it could deepen future development wells at an estimated cost of about $10 million to help de-risk targets that would otherwise cost roughly $100 million per well to explore.
The company said it was progressing discussions with Ghana on outstanding tax disputes. Miller said a higher provision reflected current discussions and Tullow’s view of the most likely outcome, while noting that the company has material government receivables it would seek to offset in any settlement. Tullow and the government agreed to defer a third arbitration concerning interest that had been due in September.
Separately, Miller said Tullow sold its first Jubilee cargo for local refining in Ghana earlier in the year. He described the sale to the Sentuo refinery as commercially based and said local refining could reduce freight-related costs.
About Tullow Oil (LON:TLW)
Tullow is an independent energy company committed to building a better future through the responsible oil and gas development of its core producing assets in Ghana. The Group is quoted on the London and Ghanaian stock exchanges symbol: TLW.
For further information, please refer to: www.tullowoil.com.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.
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