Tullow will spend most of its $350 million investment program this year on Ghana, where Jubilee produced around 75,000 boe/d in 2021 and TEN 33,000 boe/d. Tullow holds a 35.5% stake in Jubilee and 47.2% of TEN.
The company reported 2021 free cash flow of $245 million, about 43% down from the previous year and broadly in line with guidance of $250 million, and reiterated its free cash flow would reach $100 million at an oil price of $75 a barrel.
Oil prices have soared in recent months, with current benchmark contracts at around $130 a barrel, but Tullow hedges most of its output with price floors and ceilings to shield against price volatility.
"Hedging you have to do dispassionately, hedging isn't responding to the oil price because then it wouldn't be hedging, it would be called speculating," Chief Executive Rahul Dhir told Reuters.
In 2021 it lost out on $153 million in revenue due to hedges, said Tullow, which had a market capitalization of around $1.2 billion as of Tuesday and net debt of $2.1 billion.
Tullow is forecasting this year's overall output to reach 55,000 to 61,000 boe/d.
Of this, it hedged 42,500 bpd at an average floor of $51 a barrel and average ceiling of $78 a barrel and around 33,100 bpd of next year's output at $55 and $75 a barrel, with smaller production volumes hedged into 2024.
Some of its hedged price caps were as high as $95 a barrel and if it manages to keep this level for the whole year, its free cashflow this year could reach $200 million, Chief Financial Officer Les Wood said.
"We still retain good exposure to the upside," Wood said, adding that the average realized price after hedging so far this year was $89 a barrel.
Tullow's 2020 cashflow was boosted by the $500 million sale of its stake in Ugandan onshore oilfields to TotalEnergies.
