Tullow Oil says plans to strengthen balance sheet on track

(Sharecast News) - West African oil and gas producer Tullow Oil said on Thursday that its strategy of selling off non-core assets was progressing well. Updating investors ahead of its annual general meeting, the firm - which has operations in Ghana - said strengthening the balance sheet remained its "key priority".

Sale and purchase agreements have been signed for its entire Gabonese portfolio, it noted, while heads of terms have been agreed for its working interests in Kenya. Combined, the sales are expected to provide near-term cash proceeds of $380m.

Operationally, Tullow added that working interest production for the first quarter was 52,900 barrels of oil equivalent per day. Production had been affected by a two-week planned maintenance shutdown on the Jubilee field, but remained within the expected range.

Richard Miller, chief financial officer, said: "There is a renewed energy within the business following a number of recent key milestones achieved, despite the challenging oil price environment.

"We continue to advance our plan to refinance our capital structure during 2025, which, coupled with our cost optimisation programme to realise around $10m annual cash net Gabon and Kenya savings, and a continued disciplined approach to capital allocation, will lay a solid foundation for future value creation."

Miller is currently interim chief executive, after Rahul Dhir announced in December he was resigning after five years in the role.

Tullow said the search for a permanent replacement was ongoing, with an update likely "in due course".

James Hosie, analyst at Shore Capital, called it a "straightforward" trading update, adding: "Improving the balance sheet remains Tullow's priority, and the previously announced asset disposals remain the key driver for the anticipated reduction in net debt during the year."

Shore Cap has a 'buy' rating on the stock.

As at 1145 BST, shares in Tullow were down 1% at 13.81p.