Tullow Oil, the Africa-based oil producer, has expanded its exposure to worldwide oil prices amidst reduced debt, enabling a higher propensity for risk. The company announced on Thursday, as part of its trading update, that its increased access to the oil price uptick remains valid for the rest of 2024 and 2025, due to the expiry of some hedges in the current month.
Should the crude oil prices experience a $10 surge to reach $90 (€83) per barrel this year, Tullow anticipates an additional generation of a hundred million dollars in unconstrained cash flow. On Thursday, Brent, the global benchmark, was priced approximately close to $83 in London.
After 2020’s oil price slump, which led to a significant increase in the company’s net debt to $3 billion, Tullow has strategised to trim down its net debt to just under $1.4 billion. This imposed a cap on the benefits from surging prices following a rebound in crude oil, forcing Tullow to adopt a low-risk hedging strategy.
As of end of April, the company has shielded 25% of its production from potential price depreciation in the first six months of 2025. “We intend to take supplementary positions to safeguard 60 per cent of 2025’s potential downturn by the closure of this year”, a representative from the company assured in response to queries.