Interactive Investor

ii view: Tullow Oil returns to profit

Upping production guidance and reducing debt, we explore prospects for this Africa-focused oil group.

20th September 2021 14:30

Keith Bowman from interactive investor

Upping production guidance and reducing debt, we explore prospects for this Africa-focused oil group.

First-half results to 30 June 2021

  • Revenue down 0.5% to $727 million 
  • Profit after tax of $93 million, up from a loss of $1.33 billion
  • Average production down 21% to 61,230 barrels of oil equivalent per day
  • No interim dividend
  • Net debt down 24% to $2.29 billion

Chief executive Rahul Dhir said: 

"Strong operational performance in the first half of the year and a transformational debt refinancing have put Tullow on a firm footing to deliver our Business Plan. Our West Africa production assets have performed well, and we are narrowing production guidance for 2021 to the upper end of the range. 

“In Kenya, the revised development plan creates a robust project that has the potential to deliver material value to the Government of Kenya and other stakeholders.”

ii round-up:

Independent oil and gas company Tullow (LSE:TLW) is listed on the London, Irish and Ghanaian stock exchanges.

It has interests in over 40 exploration and production licences across 11 countries, including Ghana where it operates the Jubilee and TEN fields.

For a round-up of these latest results, please click here

ii view:

Under its new November 2020 strategy and 10-year business plan, Tullow aims to generate $7 billion in underlying operating cash flow and $4 billion of pre-financing cash flow at an average oil price of $55 per barrel. Oil is currently trading at over $70 per barrel. Over 90% of Tullow's capital is being focused on its West African producing assets. 

For investors, a relatively new chief executive and 10-year business plan offer a new and lower-risk business model. Asset disposals, cost cuts and a successful debt refinancing plan all add to the positives, not to mention a significant recovery in the oil price - Brent crude is up over 150% since March 2020. An ESG (environmental, social, governance) policy targeting net zero by 2030 and an emphasis on responsible operations are also noteworthy. 

But net debt of $2.29 billion as at end of June 2021 compares with a current stock market value of under £1 billion. Fossil fuel usage is also now under attack from long-term climate change initiatives, while the company's Return on Capital Employed (ROCE) remains below its three-year average. For now, and with Tullow shares up by more than 300% since pandemic lows in March 2020, the stock is arguably up with events for now. 


  • A 10-year business plan being pursued
  • Reducing debt via asset sales and costs cuts


  • Average production fell on asset sales
  • Fossil fuels negatively linked to climate change

The average rating of stock market analysts:

Weak hold

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