(WO) Tullow Oil Plc is pushing ahead with plans to sell stakes in energy deposits in East Africa and Latin America.
“We have pretty significant positions in emerging basins in Guyana and Argentina and we’re looking at farm-down opportunities there,” Chief Executive Officer Rahul Dhir said in an interview in Dubai, where he attended a conference.
In Kenya, Tullow and its partners, including TotalEnergies SE, are considering selling more than 10% of their project in the country.
“We’re willing to dilute ourselves materially,” he said. “Material isn’t 5% or 10%. It’s more than that. But we’re pretty open to what exactly that percentage is. We’re looking for someone who will add value to the group, someone with an understanding of the region.”
The $3.4 billion project in north-east Kenya will include a pipeline to the coast for exports and an estimated output of 120,000 barrels a day. The fields are expected to produce 585 million barrels over their lifetimes.
London-based Tullow is recovering after the coronavirus pandemic hammered its business last year and its shares dropped 54%. Its stock is up almost 60% in 2021 thanks largely to crude’s rebound to more than $80 a barrel.
That rise has led to hedging losses, after the company bought derivatives to protect itself against prices falling. Tullow will announce the exact figure in a statement next week, Dhir said.
“With hedging, in hindsight you always get it wrong,” he said. “We had a couple-hundred million dollars of gain on the hedge portfolio last year. As a business person, you want to protect the $55-a-barrel mark. That really secures our capex program.”
Tullow has no plans to raise additional money from capital markets after its largest-ever bond sale earlier this year, he said.
The push among Western banks and governments to transition to cleaner forms of energy means funding is more difficult to obtain, according to Dhir.
“The reality is that access to capital will change,” he said. “We’re recognizing that a lot of OECD institutions and banks won’t be active in the sector, so we’re already pro-actively looking at other sources of capital.”