Tullow Oil has projected that it will spend $5 million (Kshs. 565 million) in capital expenditure for oil development in Kenya this year.
In its January Trading Statement and Operational Update, the multinational oil and gas exploration firm estimates capital expenditure for 2022 will total $350 million (Kshs. 39.6 billion).
Tullow says under the Project Oil Kenya JV Partners, it is still seeking strategic partners for development of three oil blocks in Turkana County as discussions continue with interested parties.
“In December 2021, as per the licence extension obligations provided by the Government of Kenya in September 2020, the Project Oil Kenya JV Partners submitted a Field Development Plan for the 10BB and 13T licences, including the additional exploration and appraisal opportunities within the 10BB and 13T licences. The exploration and appraisal plan for 10BA was also submitted,” said the firm in a statement.
Tullow Oil owns 50% of block 10BB, 10BA and 13T under the joint venture which it expects to add value to its bottom line according to Tullow Oil plc Chief Executive Officer Rahul Dhir.
“Our revised Kenya development project and the Beebei-Potaro commitment well in Guyana also have the potential to be significant value drivers for Tullow. There is much to look forward to this year,” said Dhir.
Ghana where the firm has primary listing on Ghana Stock Exchange will have the biggest chunk of investment at $270 million (Kshs. 30.5 billion) in what the firm says has been prompted by investment in infrastructure for the Jubilee North East and South East areas where it expects meaningful growth in production beginning 2023.
The firm targets to spend another $30 million (Kshs. 3.4 billion) on non-operated portfolio and another $45 million (Kshs. 5.1 billion) on exploration and appraisal.
“In 2022, we will build on these firm foundations and focus on investing in our producing assets in West Africa. Our plans in Ghana, where we are in the process of increasing our stakes in both the Jubilee and TEN fields, will position us to deliver the free cash flow to reduce gearing to less than 1.5x by 2025,” he added.
Decommissioning expenditure is estimated at $100 million.
Revenue is expected to be $1.3 billion with a realised oil price of $63 per barrel, including hedge costs of $150 million while capital and decommissioning expenditure is estimated at $265 million and $70 million respectively.
Tullow says it is still keen on reducing its debt portfolio as year-end net debt last year reduced to $2.1 billion from $2.4 billion in 2020.
The projections which are yet to be audited are a precursor to the group’s full year results slated for March 2022.
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