Uganda: Tullow tilts Lake Albert for 2022 launch and leaves Suriname blocks

Uganda's Parliament may not approve the Lake Albert development until later this year, delaying the final investment decision (FID) until early 2022.

Tullow Oil noted the update in a trading update today. The company sold the Ugandan project in 2020. However, it is expected to receive a $75 million payment from TotalEnergies on FID as part of the sale agreement.

Tullow noted that both the French company and CNOOC International had reached FID. The Chinese company entered earlier this month.

Tullow has chosen not to include any payments from Uganda in its 2021 projections. As a result, the underlying cash flow for the year is expected to be about $600 million, he said, with free cash flow of about $100 million.

Capital expenditures for the year are expected to be about $265 million, up from the previous estimate of $260 million. The company said the increase was driven by revised plans in Kenya.

Tullow and its partners submitted a draft Field Development Plan (FDP) to the Kenyan government over the summer. They plan to file the final FDP by the end of 2021, as required by its license.

Progress in the Lokichar Basin will also depend on the ability to bring in a new partner. The joint venture is seeking another backer, Tullow said, with constructive discussions underway.

Tullow CEO Rahul Dhir said discussions with Kenya were progressing well.

Results offshore Suriname have been disappointing, however. The company drilled the GVN-1 well earlier this year on Block 47. The well found shows only Tullow and will now leave the license at the end of the year. It also removes Block 54 at the same point.

PRODUCTION PROSPECTS

Dhir also noted that Tullow's decision to preempt the sale to the Ghanaian government was driven by the "value and growth potential" of the assets. "We have delivered strong operational performance on both Jubilee and TEN this year and the drilling program in Ghana continues to be successful," he said.

The Ghanaian partners have completed three of the four wells planned for the year. Tullow also noted strong operational performance, with Jubilee and TEN availability at approximately 97%.

Jubilee produces 28,700 barrels per day net to Tullow, while TEN contributes 13,200 b/d net.

Beyond Ghana, Tullow expects production of approximately 17,000 b/d from its non-operated portfolio for the year.

The company noted progress on the Simba project in Gabon. Operator Perenco commissioned an infill well in September. It expects a new pipeline to be operational in December. This will increase Simba's exports.

Infrastructure-led exploration in Gabon has resulted in the discovery of Wamba, the company noted. This is adjacent to the undeveloped South Tchatamba field. Tullow said the discovery could begin producing oil in mid-2022.