Tullow Oil increase hedging of output

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Tullow Oil increase hedging of output

Africa-focused Tullow Oil has announced to have increased the volume of oil it protects with hedging to 75% of the company’s output for the next two years. Tullow’s chief executive Rahul Dhir made the announcement and said that they are considering a further 50% increase for a year beyond that.

“After a year of significant change, Tullow has emerged as a new company with a fundamentally different approach. We have shifted our focus away from exploration and development and long-cycle capital commitments to a production focused company with a robust, cash generative business plan,” said the CEO.

The oil producer had previously hedged around 60% of its output one year into the future and 30% in the second year. Set up in the 1980s to produce oil and gas in Africa, Tullow has historically focused on exploring discoveries, but the oil price collapse last year forced the company and its rivals to slash exploration budgets.

Read:Oil well drilling project in Robbana, onshore Tunisia to begin

Financial overhaul

In May, Tullow emerged from a financial overhaul with a US $1.8 billion bond sale and a new business plan. The company has focused on reducing debts, significantly cut capital allocation to long-cycle projects and has raised over US $700 million through sales of interests in Uganda, Equatorial Guinea and the Dussafu Marin permit in Gabon. Mr. Rahul also affirmed that it was on track to realise more than US $1billion over two years through assets sales and cost cuts.

“We are becoming a performance focused organisation where every barrel matters and every dollar counts. Group production to the end of May was in line with its expectations and averaged about 62,000 barrels of oil per day. We are also planning to drill four wells in 2021,” said CEO Rahul.