Tullow oil PLC - 2023 Half Year Results

First half revenue of $777 million, gross profit of $351 million and profit after tax of $70 million

Start-up of Jubilee South East marks major step up in production and free cash flow

Business plan on track to deliver c.$800 million free cash flow between 2023-2025

13 September 2023 - Tullow announces its Half Year results for the six months ended 30 June 2023. Tullow will host a webcast presentation at 9am this morning, details of which can be found below and online at www.tullowoil.com.

Rahul Dhir, Tullow Chief Executive Officer, commented today:

"We are at an important inflection point in the evolution of our business plan. For the last two and a half years we have relentlessly focused on capital discipline, operational performance and appropriate investment in our assets. This has resulted in a much-improved business, material debt reduction and most recently, the delivery of Jubilee South East which has substantially increased production. We now switch to harvesting mode as our business is set to generate c.$800 million of free cash flow between 2023 and 2025, whilst we will continue to run our business with the same discipline. This will enable us to further reduce our debt, put in place a sustainable capital structure and grow our business to create value for our investors, host nations and employees."

Delivering strategic priorities

·    First half working interest production of 53.5 kboepd; additional 7.3 kboepd net gas production from Ghana.

·    Start-up of Jubilee South East project, with gross production from the Jubilee field surpassing 100 kbopd.

·    Commercialisation of Ghana gas through interim gas sales agreement; represents a new revenue stream for Tullow.

·    Strong operational and safety performance; 97% average uptime at Jubilee and TEN FPSOs; four new Jubilee wells online year to date.

·    Gabon portfolio optimisation through cashless asset swap agreement with Perenco and licence extensions.

·    Unlocked value from sale of Tullow Guyana B.V., including the Orinduik licence, to Eco Atlantic for cash and contingent consideration.

·    Accelerated deleveraging through purchase of c.$166 million of 2025 Notes for c.$100 million cash consideration.

First Half financial Results

·    Revenue of $777 million; realised oil price of $73.3/bbl after hedging; gross profit of $351 million; profit after tax of $70 million.

·    Underlying operating cash flow of $188 million¹; free cash flow of $(142) million¹.

·    Capital investment of $187 million and decommissioning costs of $44 million.

·    Net debt at 30 June 2023 of $1.9 billion¹; Gearing of 1.7x net debt/EBITDAX¹; liquidity headroom of $0.7 billion.

Full Year Outlook

·    Full year oil production guidance narrowed to 58 to 60 kbopd (from 58 to 64 kbopd); additional c.7 kboepd gas production expected from Ghana.

·    Unchanged full year capex guidance of c.$400 million and decommissioning spend of c.$70 million.

·    Significant free cash flow reversal in the second half with c.$200 million¹ generated at $80/bbl. Unchanged full year free cash flow guidance of c.$100 million¹ at $80/bbl.

·    Year-end net debt expected to be c.$1.7 billion¹ and gearing expected to be c.1.5x (net debt/EBITDAX)¹.

·    Continued delivery of business plan to generate c.$800 million of free cash flow¹ from 2023 to 2025, supported by strong production outlook and capex flexibility.

·    Progressing a range of options to address debt maturities and position the business for a successful refinancing.

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Webcast - 9:00 BST

Access the webcast using the following link and follow the instructions provided: https://web.lumiconnect.com/156469303

¹Alternative performance measures are reconciled on pages 36 to 39.

Operational UPDATE

Production

Group working interest production averaged 53.5 kboepd in the first half of 2023. In addition, 7.3 kboepd of gas was sold under the Ghana Interim Gas Sales Agreement. Full year oil production guidance has been narrowed to 58-60 kbopd (previously 58 to 64 kbopd), driven by Jubilee first half performance slightly below expectations and the timing of the Jubilee South East start up in the second half of the year. Full year gas production in Ghana is expected to average c.7 kboepd.

Ghana

Jubilee

Gross oil production from the Jubilee field averaged 72.4 kbopd (net: 28.2 kbopd) in the first half of the year. This was slightly below expectations largely due to reduced water injection in late 2022 and into the first quarter of 2023, which has since been rectified in February 2023. In addition, Jubilee South East starting up in July has shifted the tie in and contribution of new wells to slightly later than planned. While this timing impacts the full year forecast, the anticipated ramp up remains unchanged and the field is expected to exit the year over 100 kbopd, as initially forecast at the start of 2023. Full year 2023 gross oil production from Jubilee is expected to average c.90 kbopd (net: c.35 kbopd), reduced from c.95 kbopd gross (net: c.37 kbopd).

Four wells have been brought on stream year to date - a Jubilee main producer in May, two JSE producers in July and another JSE producer this month. Two further wells - both water injectors - are scheduled to be brought on stream before year end. The wells are performing in line with expectations and the start-up of JSE has quickly increased gross production rates, with the field currently producing over 100,000 bopd. The start-up of JSE marks a significant milestone that underpins future growth and cash flow delivery, and the Group looks forward to continued project delivery.

Tullow and its partners aim to maintain the increased level of production at Jubilee through an ongoing infill drilling programme. The partnership has identified multiple future drilling locations and further opportunities to extend the plateau towards the end of the decade and realise the full potential of the significant Jubilee resource base.

TEN

Production from the TEN fields averaged 20 kbopd (net: 11 kbopd) during the first half of 2023, with improved pressure support from injection wells put online during 2021-22 resulting in negligible decline. Full year gross production remains c.20 kbopd gross (net: c.11kbopd). A planned shutdown was carried out in July and work was completed to improve asset integrity, enhance production through increased gas injection and higher liquids recovery, and reduce flaring in line with our Net Zero commitment. The TEN flare has reduced by around 50% compared to before the shutdown and with a plan to further reduce flaring at TEN into 2024.

Gas commercialisation

Net gas production in Ghana averaged 7.3 kboepd in the first half of the year. The Interim Gas Sales Agreement, initially valued at $0.50/mmbtu, was amended in July 2023 to a price of $2.90/mmbtu until the end of the third quarter of 2023. The commercialisation of Jubilee gas represents a new revenue stream for Tullow of c.$4 million per month, while commercial discussions continue for the long-term gas sales agreement. Full year net gas production in Ghana is expected to average c.7 kboepd.

Non-operated portfolio

Net production from the non-operated portfolio averaged 14.3 kboepd in the first half of 2023, in line with expectations, and full year net production forecast remains c.14 kboepd.

Production from Gabon averaged 12.8 kbopd net in the first half of 2023. In April 2023, a cashless asset swap was agreed with Perenco Oil and Gas Gabon S.A. to optimise Tullow's equity ownership across key fields in Gabon. The deal delivers a more balanced portfolio of discovered resources, appraisal and exploration assets, with the Tchatamba facilities placed as a core hub for Tullow.

Tullow announced in August that it had gained Government approval for the extension of several of its Gabon licences to 2046 reflecting the future potential of these Gabon fields and the longevity of the Tchatamba facilities. The extension is expected to add c.5mmbbls net 2P reserves, which would deliver c.100% 2P reserves replacement in Gabon this year.

Production from Tullow's fields in Gabon remains unaffected by the ongoing political activity in the country and the Group continues to work closely with the operators of its fields to ensure the safe continuation of operations.

ILX drilling continued in Gabon with the Akoum B appraisal well which was plugged and abandoned in the second quarter of 2023 after encountering insufficient resources to justify development. Within the Simba and DE8 licences, several low-risk and compelling investment options are being high-graded for near term drilling programmes.

Production from Espoir in Côte d'Ivoire averaged c.1.5 kboepd net in the first half of 2023. Tullow and its Joint Venture (JV) Partners exercised the option to purchase the Espoir FPSO for a gross consideration of c.$20 million (c.$5 million net). Tullow continues to work with the operator to establish the best way forward for the asset.

Exploration

In August, Tullow announced the sale of Tullow Guyana B.V, including the 60% operated Orinduik licence, to Eco Atlantic. The sale consists of $0.7 million cash payment upon completion and contingent considerations of $4 million on commercial discovery and $10 million on issuance of a production licence. Furthermore, royalty payments on potential future production of 1.75% of the working interest entitlement revenue net of capital expenditure and lifting costs will be due to Tullow. This transaction is in line with Tullow's strategy to optimise its portfolio and unlock value from its positions in emerging basins. Tullow and Eco Atlantic are working to secure the required approvals before the end of the year.

Decommissioning

Decommissioning expenditure in the UK and Mauritania was $44 million during the first half of the year and full year guidance was lowered to c.$70 million, following the deferral of certain activities into 2024. The majority of operational work is expected to be completed by the end of 2025, with environmental and monitoring surveys to continue from 2026. The expected remaining UK and Mauritania decommissioning exposure over 2024-26 is c.$70 million. A further c.$10 million will be paid into escrow in 2023 for future decommissioning obligations in Ghana.

Kenya

Following the withdrawal of its minority partners from Project Oil Kenya in the first half of 2023, Tullow is now the sole partner in the project (refer to Note 11 for more detail). This has created a more flexible proposition for a strategic partnership and discussions continue with several interested parties. The Kenyan energy regulator (EPRA) has recently engaged third party consultants to assist with the review of the Field Development Plan (FDP) and Tullow continues to work with the Government of Kenya and EPRA on the approval of the FDP.

Environment, Social and GOVERNANCE (ESG)

As part of Tullow's decarbonisation programme towards Net Zero in 2030, good progress is being made to eliminate routine flaring on Tullow's FPSOs in Ghana. Increased gas handling capacity work is underway on Jubilee, whilst the TEN flare has reduced by around 50% compared to before the shutdown, with a plan to further reduce flaring at TEN into 2024.

Tullow is progressing its carbon offset project with the Ghana Forestry Commission. The project is set to mitigate Tullow's hard to abate, residual, emissions whilst also supporting Ghana in meeting its Nationally Determined Contributions under the Paris Agreement. The Forestry Commission has started to engage initial stakeholders involved with the project.

Tullow continues to support education and skills development in our local communities. So far this year under Phase III of the Senior High Schools programme construction has been completed on facilities that will enable c.1000 students to access accommodation and senior high school education, and Phase IV construction is underway that will support over 1,000 additional students.

On local content, a focus area this year has been on developing Ghanaian supplier community awareness; in July, 73 indigenous Ghanaian companies and 11 officials of the Petroleum Commission graduated from the "Tullow Supply Chain Academy Programme" run in partnership with Accenture. Tullow continues to focus on increasing procurement spend with indigenous and JV companies in Ghana. In the first half of 2023, 95% of total procurement spend was with indigenous and JV companies compared to 88% over the same period last year.

At Tullow's Annual General Meeting on 24 May 2023, c.27% of votes were cast against Resolution 19. The Resolution sought the authority for the Company to purchase its own shares, pursuant to section 701 of the Companies Act 2006 (the Act) (within the meaning of section 693(4) of the Act) on such terms and in such manner as the Board of Directors of the Company may from time to time determine. As a special resolution it therefore did not pass. The Board has continued its dialogue with our major shareholders who voted against the resolution and has an understanding of the concerns raised, which relate to the potential impact on their existing shareholdings.

Mike Daly stepped down from the Board following the 2023 AGM, having served nine years as an independent non-executive Director.

Rebecca Wiles was appointed as an independent non-executive Director in June 2023, bringing deep technical subsurface and geoscience expertise as well as emerging markets experience in Africa to the Tullow Board, following a 33-year career at BP plc.

FINANCE REVIEw

¹Refer to note 2 for details on prior year restatement.

²Alternative performance measures are reconciled on pages 36 to 39.

Revenue

Sales volumes

During the period, there were 56,900 boepd (1H2022: 53,500 boepd) of liftings. The increase is mainly due to an additional lifting in 1H 2023 in Gabon compared to 1H 2022 where an incident at the Cap Lopez terminal had delayed a lifting. The total number of liftings in Ghana is comparable to the previous period with 6 in Jubilee (1H 2022: 5) and 2 in TEN (1H 2022: 3).

Realised oil price ($/bbl)

The Group's realised oil price after hedging for the period was $73.3/bbl (1H 2022: $86.3/bbl) and before hedging $79.7/bbl (1H 2022: $106.9/bbl). Lower oil prices compared to 1H 2022 have resulted in a lower hedge loss decreasing total revenue by $65.9 million in 1H 2023 (1H 2022: decrease of $189.6 million).

Cost of Sales

Underlying cash operating costs amounted to $136 million; $12.4/boe (1H 2022: $143 million; $13.0/boe). The cash unit operating costs have decreased against the comparative period due to a decrease in total operating costs in Ghana following the O&M transition in the second half of 2022 and in Gabon due to a change in the cost allocation for the Perenco-operated fields.

Depreciation, depletion and amortisation (DD&A)

DD&A charges before impairment on production and development assets amounted to $163 million; $14.8 /boe (1H 2022: $177 million: $16.1/boe). This decrease in DD&A is mainly attributable to 2022 impairments relating to TEN.

Overlift, underlift and oil stock movements

The Group had an overlift expense compared to an underlift in the comparative period. The change was due to timing of liftings specifically in Gabon in 1H 2022 where an incident at the Cap Lopez terminal delayed a lifting.

Administrative expenses

Administrative expenses of $19 million (1H 2022: $23 million) have decreased against the comparative period mainly due to decrease in depreciation of administrative assets. Tullow achieved in excess of $360 million in net cash savings for the 3-year period since mid-2020 to date thereby significantly exceeding the target of $200 million cash savings for 3-year period that had been set.

Gain on bond buyback - refer to Borrowings section below.

Exploration costs written off

During the first half of 2023, the Group has written off exploration costs of $10 million (1H 2022: $87 million) which was predominantly driven by Kenya where withdrawal of the JV Partners led to a re-assessment of risks associated to reaching FID resulting in a $9 million impairment.

Impairment of property, plant and equipment (PP&E)

The Group recognised a net impairment charge on PP&E of $33 million in respect of the first half 2023 (1H 2022: $7 million) due to changes to estimates on the cost of decommissioning for certain UK and Mauritania assets.

Net financing costs

Net financing costs for the period were $135 million (1H 2022: $149 million). This decrease is mainly due to lower interest on obligations under finance leases of $6 million as well as an increase in interest income of $8 million primarily due to higher interest rates. A reconciliation of net financing costs is included in Note 9.

Taxation

The overall net tax expense of $147 million (1H 2022: $297 million) primarily relates to tax charges in respect of the Group's production activities in West Africa, reduced by tax credits associated with UK decommissioning, exploration write-offs and impairments. The tax charge has been calculated by applying the effective tax rate which is expected to apply to each jurisdiction for the year ending 31 December 2023. 

Based on a profit before tax for the first half of the year of $217 million (1H 2022: $561 million), the effective tax rate is 67.7% (1H 2022: 52.9%). After adjusting for the non-recurring amounts related to exploration write-offs, impairments, onerous lease provisions and their associated tax benefit, the Group's underlying effective tax rate is 56.2% (1H 2022: 63.0%). The underlying effective tax rate has decreased primarily due to there being no UK tax benefit from net interest and hedging expenses, representing a smaller proportion of the Group's overall profits in 1H 2023 than in 1H 2022. Non-deductible expenditure in Ghana and Gabon and prior year adjustments are additional contributing factors.

The Group's future statutory effective tax rate is sensitive to the geographic mix in which pre-tax profits arise. There is no UK tax benefit from net interest and hedging expenses, whereas net interest income and hedging profits would be taxable in the UK. Consequently, the Group's tax charge will continue to vary according to the jurisdictions in which pre-tax profits occur.

¹The prior year has been restated to include the notional tax on the profit oil within current tax expense in accordance with the terms of the respective Production Sharing Contracts (PSCs). Refer to note 2.

Adjusted EBITDAX

Adjusted EBITDAX for the year was $1,171 million (1H 2022 restated: $1,276 million). The decrease in the period was mainly driven by lower revenues as a result of lower oil prices.

Profit for the year from continuing activities and earnings per share

The profit after tax for the period amounted to $70 million (1H 2022: profit of $264 million). Basic earnings per share was 4.9 cents (1H 2022: 18.4 cents).

Balance Sheet and Liquidity management

¹Alternative performance measures are reconciled on pages 36 to 39.

² Revenue from crude oil sales has been restated following a revision to the Group's accounting policy. This resulted in an increase to revenue for the period ended 30 June 2023 of $8.0 million (1H 2022: $12.9 million; FY 2022: $21.4 million), and a corresponding increase to income tax expense.

The restatement impacted Adjusted EBITDAX and Gearing as at 30 June 2022, increasing Adjusted EBITDAX from $1,262.6 million to $1,275.5 million, and reducing gearing from 1.9 to 1.8. Refer to Note 2.

Capital investment

Capital expenditure amounted to $187 million (1H 2022: $156 million) with $177 million invested in production and development activities and $10 million invested in exploration and appraisal activities.

Capital investment will continue to be carefully controlled in the second half of 2023 and total 2023 capital expenditure is expected to be c.$400 million. The capital investment total is expected to comprise Ghana capex of c.$300 million, West African Non-Operated capex of c.$60 million, Kenya capex of c.$10 million and exploration spend of c.$30 million.

Derivative financial instruments

Tullow has a material hedge portfolio in place to protect against commodity price volatility and to ensure the availability of cash flow for re-investment in capital programmes that are driving business delivery.

Tullow's commodity hedging policy aims to ensure that 60% of the forecast sales entitlement volumes benefit from downside protection for the first year ahead, and 30% for the second year ahead. In addition, through appropriate instrument selection, Tullow is committed to maintaining full access to upside for no less than 60% of sales volumes. Tullow has recently started the implementation of new hedges and now has downside protection in place for c.60% of forecast sales volumes through to the end of 2023, with legacy uncapped upside exposure for c.45% for the same period.

At 30 June 2023, the Group's derivative instruments had a net negative fair value of $79 million (30 June 2022: negative $573 million).

All financial instruments that are initially recognised and subsequently measured at fair value have been classified in accordance with the hierarchy described in IFRS 13 Fair Value Measurement. Fair value is the amount for which the asset or liability could be exchanged in an arm's length transaction at the relevant date. Where available, fair values are determined using quoted prices in active markets. To the extent that market prices are not available, fair values are estimated by reference to market-based transactions or using standard valuation techniques for the applicable instruments and commodities involved.

All of the Group's derivatives are Level 2 (1H 2022: Level 2). There were no transfers between fair value levels during the year.

From 30 June to date, Tullow has added further hedge volumes in the following periods:

¹Aug-Dec 23: 5 kbopd $60/bbl straight puts;

²1H 2024: c.9 kbopd $60/bbl straight puts,

³2H 2024: 3.5 kbopd of collar structures with $60/bbl floors and weighted average sold upside (ceiling) of $115/bbl.

Borrowings

On 15 May 2023, the Group made a mandatory prepayment of $100 million of the Senior Secured Notes due 2026, which reduced total drawn debt to $2.4 billion. On 20 June 2023, the Group repurchased $167 million nominal value of Senior Notes due 2025 for $100 million cash consideration through an Unmodified Dutch Auction. This further reduced total debt to $2.2 billion. A gain on early bond redemption of $65 million is recognised as other income in the income statement. The remaining outstanding Senior Notes due 2025, amounting to $633 million nominal value, are due in March 2025.

Management regularly reviews options for optimising the Group's capital structure and may seek to retire or purchase outstanding debt from time to time through cash purchases or exchanges in the open market or otherwise. Refer to Note 18 - Borrowings for further detail.

Credit Ratings

Tullow maintains credit ratings with Standard & Poor's (S&P) and Moody's Investors Service (Moody's).

On 21 June 2023, S&P's downgraded Tullow's corporate credit rating to CCC+, stable outlook, from B- with negative outlook, and the rating of the $1.6 billion Senior Secured Notes due 2026 to CCC+ from B- and the rating of the $633m Senior Notes due 2025 to CCC from CCC+. S&P's rating action follows Tullow's repurchase of $166.5 million of its $800 million Senior Notes due 2025 and reflects S&P's view that there may be a risk of further bond buybacks below par, which S&P's may see as distressed, and Tullow's dependence, in S&P's view on favourable financial markets to refinance its debt maturities.

On 21 June 2023, Moody's appended a limited default (LD) designation to Tullow's Caa1-PD Probability of Default rating following Tullow's repurchase of $166.5 million of its $800 million Senior Notes due 2025. The LD designation reflects Moody's view that Tullow's debt repurchase constitutes a 'distressed exchange' under Moody's definition, which encompasses events whereby issuers fail to fulfil debt service obligations outlined in their original debt agreements, including buying back outstanding debt at a substantial discount to par. As per Moody's methodology, the LD designation was removed after 3 business days.  The LD designation does not constitute a rating action. Consequently, Tullow's ratings remain unchanged at Caa1, negative outlook for the corporate credit rating, Caa1 for the $1.6 billion Senior Secured Notes due 2026, and Caa2 for the $633 million Senior Notes due 2025.

Underlying Operating Cash Flow and Free Cash Flow

Underlying operating cash flow amounted to $188 million (1H 2022: $165 million.) This increase mainly relates to a payment in 1H 2022 of $77 million relating to a historic dispute that has now been settled, lower Gabon royalty payments of $18m and lower operating costs of $11 million offset by a decrease in cash revenue of $81 million in the current period.

Free cash flow has increased to $(142) million (1H 2022: $(205) million) primarily due to an increase in underlying operating cash flow of $23 million as explained above. There has been a decrease in net cash used in investing activities of $58 million due to the one- off Ghana pre-emption payment and Uganda FID consideration receipt in 1H 2022 but this has been offset by an increase in capex of $15 million and decommissioning spend of $11 million in the current period.

Net Debt and Gearing

Liquidity Risk Management and Going concern

The Directors consider the going concern assessment period to be up to 30 September 2024. The Group closely monitors and manages its liquidity headroom. Cash forecasts are regularly produced, and sensitivities run for different scenarios including, but not limited to, changes in commodity prices, different production rates from the Group's producing assets and different outcomes on ongoing disputes or litigation.

Management has applied the following oil price assumptions for the going concern assessment:

Base Case: $76/bbl for 2023, $74/bbl for 2024; and

Low Case: $70/bbl for 2023, $70/bbl for 2024.

The Low Case includes, amongst other downside assumptions, a 10% production decrease and 12% increased operating costs compared to the Base Case as well as increased outflows associated with ongoing disputes. It also assumes that the TEN FPSO remains leased and not purchased during the assessment period as Tullow has control over the timing of the purchase under the contract.

At 30 June 2023, the Group had $0.7 billion liquidity headroom consisting of c.$0.2 billion free cash and $0.5 billion available under the revolving credit facility.

The Group or its affiliates may, at any time and from time to time, seek to retire or purchase outstanding debt through cash purchases and/or exchanges, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will be upon such terms and at such prices as management may determine, and will depend on prevailing market conditions, liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.

The Group's forecasts show that the Group will be able to operate within its current debt facilities and have sufficient financial headroom for the going concern assessment period under its Base Case and Low Case. Based on the analysis above, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. Thus, they have adopted the going concern basis of accounting in preparing the half year results.

2023 principal risks and uncertainties

The Company risk profile has been closely monitored throughout the year, with consideration given to the risks to delivering the Business Plan, as well as whether external factors such as geo-political factors, global pandemics and oil price volatility have resulted in any new risks or changes to existing risks. The impact of these factors has been considered and managed across all principal risks. The directors have reviewed the principal risks and uncertainties facing the Company and concluded that for the remaining six months of the financial year are substantially unchanged from those disclosed in the 2022 Annual Report and are listed below.

1.     Risk of failure to deliver business plan

2.     Risk of an asset integrity breach

3.     Risk of a major accident event

4.     Risk of failure to unlock value

5.     Risk of failure to manage geopolitical risks

6.     Risk of failure to meet climate change targets

7.     Risk of insufficient liquidity and funding capacity to sustain and grow the business or risk of failure to deliver a highly cash-generative business

8.     Risk of failure to develop, retain and attract capability

9.     Risk of a compliance or regulatory breach

10.  Risk of major cyber disruption

The detailed descriptions of the principal risks and how they are being managed can be found on pages 42 to 45 in the 2022 Annual Report and Accounts.

Events since 30 June 2023

Gabon

Approval of asset swap with Perenco

On 28 April 2023, Tullow announced that through its wholly owned subsidiary, Tullow Oil Gabon S.A., it had signed an asset swap agreement (ASA) with Perenco Oil and Gas Gabon S.A. (Perenco). Under the ASA, Tullow has agreed to assign and transfer certain of its existing participating interests in Limande, Turnix, M'oba, Oba and Simba assets to Perenco in return for the assignment and transfer by Perenco of 15% if its participating interests in Kowe (Tchatamba) and 20% of its participating interests in DE8 assets to Tullow.

The exchange of the transferred Interests between the parties will be deemed for all purposes to be made with effect from the economic date of 1 February 2023. Due to the agreed neutrality of the transaction, no additional consideration is payable by either party in respect thereof. The ASA includes provisions to ensure the neutrality of the transaction via cash adjustments for the period between signing and completion.

On completion, all assets and associated liabilities relating to the existing participating interests held in Limande, Turnix, M'Oba and Oba assets, together with 17.5% of Tullow's interest in Simba, will be disposed. All assets impacted by the transaction are included in the "Non-Operated" business unit applied for segment performance reporting.

The transaction is expected to complete by the end of 2023, subject to the fulfilment of certain conditional precedents, including the written approval of the relevant Governmental Authority of the Gabonese Republic of the amendment of the Tullow Protocol. (The "Tullow Protocol" is an investment convention that applies to certain Tullow licences.)

Management concluded that the assets did not meet the IFRS 5 Held for Sale(HFS) criteria as of 30 June 2023 because the approval of the Tullow Protocol was considered a substantive condition without which the transaction would be unlikely to proceed. Subsequent to the reporting date, the approval has been received and the HFS criteria was met on 19 July 2023.

Licence extensions
On 9 August 2023, Tullow announced that it had gained approval from the Government of Gabon for the extension of several of its Gabon licences operated by Perenco, from 2034 to 2046.  In addition to fulfilling the conditional precedent to the swap transaction, the licence extension increases the value of Tullow's resource base through the addition of c.5mmbbls net 2P reserves that are expected to deliver c.100% 2P reserves replacement in Gabon this year.

Current political situation
Production from Tullow's fields in Gabon remains unaffected by the ongoing political activity in the country and the Group continues to work closely with the operators of its fields to ensure the safe continuation of operations.

Guyana

On 10 August 2023 Tullow announced that it had agreed to sell its total interest in Tullow Guyana B.V., which includes the Orinduik licence (60% operated equity) in Guyana, to Eco Guyana Oil and Gas (Barbados) Limited in exchange for an upfront cash consideration of $0.7 million and contingent consideration linked to a series of potential future milestones, triggered as follows:

·      $4 million payment in the event of a commercial discovery;

·      $10 million payment upon the issuance of a production licence from the Government of Guyana;

·      Royalty payments on future production - 1.75% of the 60% working interest entitlement revenue net of capital expenditure and lifting costs.

The transaction is subject to customary government and other approvals and is expected to complete in the second half of 2023.

There have not been any other events since 30 June 2023 that have resulted in a material impact on the interim results.

Responsibility statement (DTR 4.2 and the Transparency (Directive 2004/109/EC) Regulations (as amended))

The Directors confirm that to the best of their knowledge:

a.     the condensed set of financial statements has been prepared in accordance with IAS 34 'Interim Financial Reporting' as adopted by the UK and EU and IAS 34 'Interim Financial Reporting' as adopted by the EU, the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority (DTR) and the Transparency (Directive 2004/109/EC) Regulations 2007 as amended

b.     the interim management report includes a fair review of the information required by DTR 4.2.7R and Regulation 8(2) (indication of important events during the first six months and description of principal risks and uncertainties for the remaining six months of the year); and

c.     the interim management report includes a true and fair review of the information required by DTR 4.2.8R and Regulation 8(3) (disclosure of related parties' transactions and changes therein).

A list of the current Directors is maintained on the Tullow Oil plc website: www.tullowoil.com.

By order of the Board,

Rahul Dhir

Chief Executive Officer

12 September 2023

Richard Miller

Chief Financial Officer

12 September 2023

Disclaimer

This statement contains certain forward-looking statements that are subject to the usual risk factors and uncertainties associated with the oil and gas exploration and production business. Whilst the Group believes the expectations reflected herein to be reasonable in light of the information available to them at this time, the actual outcome may be materially different owing to factors beyond the Group's control or within the Group's control where, for example, the Group decides on a change of plan or strategy. Accordingly, no reliance may be placed on the figures contained in such forward-looking statements.