Tullow Oil increases its annual cash flow forecast on the strength of Ghana's oil output and higher oil prices

Tullow Oil, a West African-based company, forecast its annual production on Wednesday at the upper?end of its forecast range and increased its projection for free cash flow. This was due to a strong performance in its Ghana fields as well as better than expected oil price realizations.

It has reshaped its business in Ghana by selling assets in Gabon and Kenya, and refinancing the debt. The company also obtained licence extensions until 2040 for its flagship Jubilee?field and TEN?field, supporting more drilling and production. Tullow increased its forecast for annual free cash flows to $170-$250 millions from $70-$175million, citing higher production and oil prices realisations as well as progress in recovering funds that Ghana's Government owes.

It is expecting annual production to be at the upper end of its forecast range (34,000-42,000 barrels equivalent per day).

The company reported that it realized an average oil price of $95 per barrel before hedging six cargoes during the first half. After hedging this was reduced to $86 per barrel, with hedging costs amounting to approximately $47 million.

(source: Reuters)