Tullow Oil H2 Earnings Call Highlights

Key Points

• Tullow reported strong operational momentum with Q1 2026 production at 43.4 kboepd (up from 40.4 kboepd in 2025), driven by the Jubilee drilling campaign where three wells are online, three more are expected by end‑July, and Ghana asset availability is near 100%.
• A comprehensive refinancing completed extends senior secured notes to 2028 and Glencore notes to 2030, lowers cash interest by about $50m per year (to ≈$125m) and underpins 2026 pre‑financing cash flow guidance of $260–365m, implying $70–175m of free cash flow after financing costs.
• Tullow keeps a hedging policy targeting 60% downside protection while retaining upside exposure, has realized premiums on West African crude (one Jubilee cargo fetched $130/bbl), and reports improved Ghana relations and payment mechanisms that support receivable recovery and further Jubilee/TEN development upside.

Tullow Oil LON: TLW executives said the company has built a “stable foundation” over the past 12 to 15 months and is seeing strong operational momentum in early 2026, supported by improved uptime in Ghana and progress on a Jubilee drilling campaign.

Chief Executive Officer Ian Perks, who joined the company in September, told investors the business has focused on “disciplined execution against a set of clear actions,” including divestments, cost reductions, and a comprehensive refinancing completed “yesterday.” He said Tullow is also seeing benefits from new subsurface data, including 4D and ocean-bottom node (OBN) seismic, which is helping to support existing and potential future drilling activity.

Operational performance strengthens in early 2026

Perks said production in the first quarter of 2026 averaged 43.4 thousand barrels of oil equivalent per day (kboepd), up from 40.4 kboepd in 2025. If performance continues, he said the company would expect to be “at the very high end” of its full-year 2026 production guidance of 34,000 to 42,000 boepd.

The CEO attributed the start to the year to both drilling results and operating performance. He said three Jubilee wells have been brought on stream since mid-2025 and are producing in line with pre-drill expectations, with three more producers expected online before the end of July. The campaign is expected to conclude with a water injection well in September, and Perks noted early log results from the next well, J-76, “indicate another positive outcome.”

Perks also emphasized high asset availability in Ghana, saying Jubilee and TEN have seen “nearly 100% availability” so far in 2026. He said this reflects specific reliability actions taken during a Jubilee shutdown last year, along with a proactive maintenance program. In response to a question from Barclays analyst Lydia Rainforth, Perks cited “upgrades on the electrical systems” and removal of “spurious trips, sensors” as examples of work that has improved performance.

On field management, Perks said improved and consistent water injection has supported pressure management and contributed to enhanced recovery and some “flush production from key wells.” He added that well stability and reliability has improved through dual riser operations and riser-based gas lift at Jubilee, contributing to “a slightly slower than anticipated production decline.”

2025 results and 2026 cash flow guidance

Chief Financial Officer Richard Miller said 2025 production of 40.4 kboepd included a 17-day planned maintenance shutdown at Jubilee and was in line with guidance, though toward the low end due to operational challenges at Jubilee in the first half. He said production improved in the second half as drilling began and a new well started producing in July.

Miller said average realized oil prices in 2025 were $66 per barrel. In the first quarter of 2026, realized prices increased materially, with the first four cargoes averaging $90 per barrel. The company revised its oil price guidance range to $70 to $100 per barrel to reflect higher current prices and uncertainty for the rest of the year.

In 2025, Miller reported net cash general and administrative costs of $45 million, and said actions have been taken to reduce this by a further $20 million in 2026. Capital expenditure in 2025 was $166 million, primarily related to drilling two Jubilee wells, while 2026 capital spending is also focused on Jubilee, with nearly 90% allocated there and six wells expected onstream this year.

Miller said 2025 free cash flow was $99 million, which he described as lower than expected due to weaker realized revenues late in the year as Brent dipped below $65 in November and December, as well as delayed receipts including the second tranche of Kenya disposal proceeds (received in March 2026) and delays in cash calls and gas payments from the Government of Ghana. He added that 2025 cash flow included $347 million of disposal proceeds.

For 2026, Miller guided to $260 million to $365 million of pre-financing cash flow at $70 to $100 per barrel. That would translate to $70 million to $175 million of free cash flow after approximately $130 million of financing costs and around $60 million of refinancing-related fees.

Asked by Jefferies analyst Mark Wilson whether free cash flow guidance was before or after leases, Miller said it was “after,” describing it as “the bottom line free cash flow that will reduce net debt.”

Refinancing extends maturities and reduces cash interest

Miller said the refinancing completed the prior day extended the maturity of senior secured notes to 2028 and Glencore notes to 2030. He also said Tullow agreed a $100 million “new money cargo prepayment facility” with Glencore to support liquidity.

He said the company lowered cash interest costs by $50 million per year through the use of paid-in-kind and pay-if-you-can interest, reducing the cash interest run rate to about $125 million per year. Miller said these steps provide “a stable platform” to pursue value-accretive investments and, longer term, consider further refinancing, strategic investment, or a “value-maximizing divestment process.”

In response to a question about next steps on financial structure, Perks and Miller said the refinancing provides time ahead of the next maturity, and that stronger cash flow in the current oil price environment creates more options. Miller added that “every day the oil is above $100 a barrel it fundamentally reduces the quantum that we would need to refinance.”

Oil price exposure, hedging approach, and cargo guidance

Miller said Tullow’s hedging policy remains unchanged, targeting 60% downside protection while keeping at least 60% of midpoint forecast exposed to higher oil prices. He said the company uses puts, collars, and three-ways and has not entered into swaps.

He highlighted market dislocations since the war in the Middle East, noting Dated Brent reached an all-time high recently. He said Tullow priced a Jubilee cargo during that period and realized $130 per barrel, “the highest realized price Tullow has ever achieved on a cargo.” Miller added that West African crude is trading at a premium to Brent and, because Tullow’s hedges are priced against Dated Brent, the company has “100% access to this premium.”

Miller said incremental free cash flow for every $10 per barrel increase above the guided range is “around $30 million.” He also said the $130-per-barrel cargo delivered “over $116 million of revenue to Tullow.”

During Q&A, Rainforth asked about the pace of liftings versus earlier comments on realized prices. Miller said the four cargoes covered through the end of April—three Jubilee and one TEN. For the full year, he said Tullow is guiding to 10 Jubilee cargoes and 2.5 TEN cargoes, with potential to rise to 11 Jubilee and three TEN cargoes if production hits the top end of guidance.

Ghana receivables, gas payments, and project pipeline

Miller said 2026 cash flow guidance includes recovery of 2025 cash call receivables from the Government of Ghana and about $40 million of pre-tax gas revenues from 2026 gas production. It excludes roughly $110 million in historic gas receivables and approximately $50 million related to TEN development debt. He said the company is working “collaboratively” with the government to reduce receivables, noting that 2026 gas payments are up to date and certain 2025 cash calls have been settled.

Perks said the relationship with Ghana has strengthened, pointing to a gas payment security mechanism approved by Parliament and a petroleum agreement extension secured in early 2026.

Looking beyond 2026, Perks said Tullow’s planning is centered on converting resources into reserves through technical and engineering studies and a capital allocation process focused on “quick payback and high returns.” He described opportunities at Jubilee including future drilling beyond the current campaign—at least three wells being assessed for potential execution starting sometime in 2027—and projects such as multi-phase pumps and Teak gas development.

At TEN, Perks said opportunities include advancing gas-related plans and giving greater certainty to an Ntomme infill campaign that currently sits in an upside case. He added that there is no planned Jubilee shutdown in 2026 or 2027, after last year’s shutdown. Perks also clarified that the current rig contract with Noble will conclude in September 2026 with the water injector, with work underway to firm up a later 2027 campaign that would require securing a new rig.

Perks said Tullow sees “credible scenarios” valuing the company at “$2 billion and above,” while noting sensitivity to oil prices and discount rates. He concluded that the company intends to maintain operational and cash flow momentum, supported by the refinancing and what he called a “rich opportunity set” ahead.

About Tullow Oil LON: TLW

Tullow is an independent energy company that is building a better future through responsible oil and gas development in Africa. Tullow's operations are focused on its core producing assets in Ghana. Tullow is committed to becoming Net Zero on its Scope 1 and 2 emissions by 2030, with a Shared Prosperity strategy that delivers lasting socio-economic benefits for its host nations. The Group is quoted on the London and Ghanaian stock exchanges symbol: TLW. For further information, please refer to: www.tullowoil.com.

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