Tullow Oil (TLW) H2 2023 earnings summary

Executive summary

• Production rose to 62.7 kboepd in 2023 from 61.1 kboepd; free cash flow was $170m and net debt fell to $1.6bn.

• Strategy targets c. $800m free cash flow over 2023-25, with deleveraging prioritized before increased investment optionality from 2026.

Financial highlights

• Revenue was $1,634m in 2023 versus $1,783m in 2022; gross profit was $765m versus $1,086m.

• Profit after tax was a loss of $110m, versus profit of $49m in 2022; adjusted EBITDAX was $1,151m versus $1,469m.

• Capital investment was $380m versus $354m; free cash flow was $170m versus $267m.

Outlook and guidance

• 2024 production guidance is 62-68 kboepd; capex c. $250m and decommissioning c. $70m.

• 2024 free cash flow guidance is $200-300m and net debt is expected at $1.4bn by year-end, both at $80/bbl.

• 2023-25 free cash flow target is c. $800m; expected net debt is below $1bn by YE2025, with a further $600m FCF expected over 2024-25.

• From 2026, investment and shareholder return optionality is planned while retaining leverage below 1x; ongoing finance costs are expected to reduce.