West Africa-focused Tullow Oil said today it expected to generate $500m in operating cashflow this year at an oil price of $50 a barrel, which is around $15 a barrel below the current price.
Tullow reported 2020 operating cashflow of $598m and an after-tax loss of $1.2 billion after writing off exploration assets and other impairments.
This year Tullow expects to produce 60,000-66,000 barrels per day, down from 74,900 bpd last year after asset sales.
By the end of 2020, it had hedged 40,000 bpd of its 2021 output at a floor price of just over $48 a barrel.
After raising the spectre of a potential cash crunch in September, Tullow last month reached a deal with its banks to scale down its reserve-based loan, taking its liquidity to around $900m.
Talks with bondholders and banks continue.
Tullow chief executive Rahul Dhir said he expected to reach a deal with creditors to extend 2021 and 2022 maturities, rather than change the amount of debt, in the first half of this year.
With net debt of around $2.4 billion at the end of 2020, Tullow had a market capitalisation of around $1 billion as of yesterday.
Tullow revamped its business last year to focus on squeezing its offshore fields in Ghana.
Today it committed to becoming net carbon zero by 2030 in terms of greenhouse gas emissions from its own operations and the power it uses, including the use of forestation offset credits to amend for residual emissions.
Rahul Dhir, Tullow's chief executive, said that after a year of significant change for the company, it is now executing a robust, cash generative business plan which is focused on its most productive assets.
"We have transformed our cost base, implemented rigorous capital discipline and are well placed to benefit from higher oil prices," Rahul Dhir said.
Tullow is due to start a multi-year, multi-well drilling programme in Ghana next month, which the CEO said will deliver sustainable and profitable production growth.
"Our self-help initiatives will deliver about$1 billion, including over $700m from asset sales in the past year," he said.
"Strong business delivery, increased liquidity and improving commodity prices support constructive refinancing discussions," he added.
