Oil and gas producer Tullow Oil has today reported an annual operating profit after three years in the red and said it expected the first oil from Kenya in 2021 or 2022.
The Africa-focused company is targeting East Africa as its next frontier after developing two large fields in Ghana earlier this decade.
Tullow entered Kenya in 2010 and has more 48,000 square kilometres of acreage in the country.
It said after appraisal drilling and well tests at the South Lokichar basin, it estimated the land-locked basin to contain 560 million barrels of oil in recoverable resource, compared with an earlier resource estimate of 750 million barrels.
Tullow and its partners proposed to begin with the development of the Amosing and Ngamia fields and construct a processing facility with a capacity of 60,000 to 80,000 barrels per day, which would be exported via pipeline to the coastal town of Lamu.
The company expects to reach a final investment decision on the project by 2019 and first oil production by 2021-22, it said.
Tullow said its net debt fell 27% to $3.5 billion as higher revenue allowed the company to end the year with $543m of free cash flow.
The company also forecast 2018 capital expediture of $460m, more than double its spending in 2017 of $225 million.
Tullow reported an operating profit of $22m for the year ended December 31, compared with a loss of $755m in 2016, helped by higher production and cost cuts.
Analysts were expecting a loss of $103.6m, according to a company-compiled consensus.
The company said its working interest production was 32% higher at an average of 94,700 barrels of oil equivalent per day (boepd) in 2017.
It forecast 2018 production in the range of 86,000 to 95,000 boepd.