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Tullow Oil 2017 cash generation beats expectations
Tullow Oil said on Wednesday that it expects to generate free cash flow above expectations for 2017 thanks to high levels of production and cost efficiency.
In a trading statement for the year to the end of December 2017, the oil explorer said it expects to report revenue of around $1.7bn and gross profit of around $0.8bn. It also expects to have generated $0.5bn of free cash flow, "significantly exceeding" the forecast at the start of the year.
In addition, the group expects year-end net debt to be $3.5bn, down $1.3bn over the course of the year.
As far as production is concerned, Tullow said its West Africa oil production in 2017 exceeded expectations for the year, averaging 89,100 barrels of oil per day. In Europe, working interest gas production performed in line with expectations with full year net production averaging 5,600 barrels of oil equivalent per day.
Looking ahead to this year, overall group production for both oil and gas is expected to come in between 86,000 and 95,000 boepd.
Chief executive Paul McDade said: "Tullow delivered strong operational and financial performance in 2017 against the backdrop of continued industry volatility.
"Over 2018 we expect to continue this positive momentum. With our diverse low-cost assets and high-graded exploration portfolio, enhanced by recent licence additions in Côte d'Ivoire and Peru, we have a strong foundation to grow the business and further reduce our debt."
RBC Capital Markets analyst Al Stanton said: "Given the cash beat Tullow is starting 2018 in a better position that we expected, and current oil prices are also a welcome windfall. The outlook for 2018 is in line with our expectations and a steady level of activity should help the company attract investors back."
At 0945 GMT, the shares were up 2.6% to 227p.