Tullow Oil - Suriname is less than 1% of sum of the Parts, focus remains on producing assets

All,

Please find our existing analysis on Tullow here.

The news this morning that Tullow are abandoning the well offshore Suriname is disappointing but should be put in context. All of the exploration assets of Tullow are valued $35m in our Sum of the Parts, less than 1% of our $4bn EV, so while it is disappointing to be abandoning the well, it is insignificant in the overall context. Suriname was the majority of the Exploration CAPEX spend planned for FY21 with guidance of $60m in Q1 2021. Tullow own stakes in two other blocks in Suriname but are unlikely to progress to drilling and further CAPEX in the medium term.

The result of this news is there will be limited CAPEX on exploration assets going forward, with substantially all of the CAPEX focusing on Jubilee and TEN fields, both with existing production and proven reserves. The news is a small negative, but majority of focus will remain on the producing assets.

We remain long the 2025 and 2022 bonds and long position in the equity. We expect the Company to raise new money from bond or equity markets to remove near term maturities.

Happy to discuss.

Tomás
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