Tullow Oil said it will commit 90% of its investments in coming years on its existing oilfields offshore West Africa and move exploration activities to the back burner as it seeks to reduce its debt burden.
As part of a Capital Markets Day, Tullow said it expected to generate $7 billion of operating cash flow over the next 10 years.
Tullow has a market capitalisation of $560m as of yesterday and $2.4 billion in net debt.
"The plan focuses our capital on a deep portfolio of short-cycle, high-return opportunities within our current producing asset base and will ensure that Tullow can meet its financial obligations," Rahul Dhir, its new chief executive, said.
Tullow said it had produced only 14% of the 2.9 billion barrels in place in its Ghanaian fields and drilling there would start in the second quarter aiming to expand output in the medium term.
It said it expected to invest around $2.7 billion over the next 10 years and make $4 billion in cash flow to pay down debt and distribute shareholder returns at oil prices of $45 a barrel in 2021 and $55 from 2022.
In September, Tullow had raised the prospect of a potential cash crunch at a debt covenant test in January 2021.
It said it was looking at options like refinancing convertible bonds due next year or the senior notes due in 2022, amending its reserve-based lending (RBL) facility or raising cash from banks or other investors by January.
Tullow last year suffered a series of missed production targets, prompting its previous chief executive to step down late last year.
The company, which previously said it aimed to raise $1 billion from divestments, said today it saw less need for more sales after selling its stake in yet-to-be developed Ugandan fields to Total for $575m and following cost cuts.
Tullow said it was working on understanding the basin of its offshore field in Guyana, which lies next to the Stabroek field where Exxon Mobil has discovered about eight billion barrels of oil equivalent but which has delivered some disappointing results.
Rahul Dhir, the company's chief executive, said that since joining Tullow in July he had been deeply impressed by the strength of the group's assets, especially in Ghana.
"Following hard work by our team, and with input from our partners and external experts, we have a clear strategy and plan for the next ten years," the CEO said.
"The plan focuses our capital on a deep portfolio of short-cycle, high-return opportunities within our current producing asset base and will ensure that Tullow can meet its financial obligations and deliver material value for our host nations and investors," he added.