Tullow Oil remains committed to its merger with Egypt-focused Capricorn Energy, which has faced mounting headwinds.
Tullow announced its half-year results this morning, giving CEO Rahul Dhir another opportunity to support the deal.
The company’s board “remains fully committed” to the merger, he said, with both Tullow and Capricorn’s boards recommending the current terms.
“We firmly believe that the proposed merger has the potential for material value creation by implementing a combined business plan which accelerates investment in key projects and delivers very significant synergies.”
Capricorn warned recently that it had received interest from other interested parties.
While Tullow said all the right things about its Capricorn plan, the company did exclude it from its going concern calculations.
Beyond its potential move into Egypt with Capricorn, Tullow has continued to make progress in Ghana. Indeed, drilling is going so well that the company has pushed back a decision on contracting a second rig.
Drilling began in April 2021. The work has so far provided eight new wells, six at Jubilee and two at TEN. These have an average cost of $50 million, more than 10% below the expected cost, and ahead of schedule.
However, one well drilled at Ntomme was found to hold water, although among good quality reservoirs. It will drill the second of these strategic riser base wells later this year.
The next phase of drilling at the Jubilee field will also accelerate in the fourth quarter.
Production for the first half reached 60,900 barrels of oil equivalent per day, with Tullow now guiding full year volumes of 60,000-64,000 boepd. Ghana contributed 43,300 boepd of this amount.
Revenue in the first half reached $846 million, up year on year from $747mn. Profit after tax was $264mn, from $93mn.
Free cash flow was negative $205mn, though two liftings after the period end provided $200mn of revenue.