Tullow Oil ups 2022 free cash flow outlook, Ghana tax looms

LONDON (Reuters) – West Africa-focused oil producer Tullow sees its 2022 free cash flow at $267 million, slightly ahead of previous guidance and up from $245 million the previous year, it said in a trading update on Wednesday.

It plans to invest $400 million this year, mainly on its flagship fields in Ghana, expecting free cash flow to come in at $100 million at an oil price of $80 a barrel, or twice that at $100 a barrel.

Tullow faces a 2023 cash tax bill in Ghana of at least $300 million at an oil price of $80 a barrel, but believes the “assessments are without merit” and is in talks with the government to resolve the dispute, it said.

Tullow had no immediate comment when asked what last year’s figure was. In its 2021 results, Tullow said its tax expenses in Ghana totalled around $163 million.

Cost cuts and a focus on its fields in Ghana led Tullow to guide for $700-$800 million in free cash flow for the 2024-2025 period, if an oil price of $80 a barrel is realised.

It said it had hedged 33,100 barrels per day (bpd) of this year’s output and 11,300 bpd of 2024’s production at between $55 and $75 a barrel.

After hedging, Tullow achieved an average of $87 per barrel in 2022, it said.

This year it expects to produce between 58,000 and 64,000 bpd, broadly in line with 2022.

Tullow is due to report full-year results on March 8.

(Reporting by Shadia Nasralla; editing by Jason Neely)