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Tullow in fresh talks over early oil project

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Tullow Oil says it has re-engaged government officials on the overall approach and timelines on progressing with the Early Oil Pilot Scheme (EOPS), which was initially slated to commence in June last year.

In a trading statement and operational update in respect of the financial year to December 31, 2017 posted on its website, Tullow Oil says the recent phase of exploration and appraisal drilling in the South Lokichar Basin has been concluded and the focus is now on the EOPS and the overall development plan for the discovered resources.

“Work is already under way on the EOPS, with initial injectivity testing commencing on Ngamia-11 and oil production and water injection facilities being constructed in the field ready to commence production/injection in the first quarter of 2018. Oil produced will initially be stored until all necessary consents and approvals are granted and work is completed for the transfer of crude oil to Mombasa by road,” the update says.

“Significant progress on the field development plan continues to be made and following the extended election period, Tullow has re-engaged with representatives of the Government of Kenya on the overall approach and timelines for progressing the development,” it adds.

The British oil giant says the Environmental and Social Impact Assessment (ESIA) for the overall field development is on track to commence later in the first quarter of 2018. Tullow intends to give its assessment of discovered resources and plans for development of the South Lokichar basin at its Full Year Results on February 7, 2018.

Tullow Oil Chief Executive Paul McDade said the company delivered strong operational and financial performance in 2017 against the backdrop of continued industry volatility.

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“The business is expected to generate free cash flow of $0.5 billion, above expectations, due to high levels of operated production and further progress on cost and capital efficiency. There was also material improvement in the Group’s balance sheet, with significantly reduced gearing and an overall reduction in net debt of $1.3 billion. 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.”

Tullow expects to report revenue of c.$1.7 billion and gross profit of c.$0.8 billion for 2017. The Group also expects to have generated $0.5 billion of free cash flow, significantly exceeding the forecast at the start of the year.

“This increase is primarily due to strong production performance, rigorous cost discipline and a rising oil price. This free cash flow has enabled ongoing debt reduction and the Group expects year-end net debt to be $3.5 billion; a reduction of over $1.3 billion over the course of the year,” it says.

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BT Reporter
BT Reporterhttp://www.businesstoday.co.ke
editor [at] businesstoday.co.ke
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