Tullow Oil upgrades 2026 free cash flow guidance after strong Ghana performance

Tullow Oil has delivered a notably stronger operational update, with new Jubilee wells, high asset uptime and better-than-expected oil price realisations supporting a sizeable upgrade to full-year free cash flow guidance.

The company now expects to generate free cash flow of $170-250 million in 2026, compared with its previous range of $70-175 million. That is a meaningful improvement at both ends of the range, although Tullow still carries substantial debt and generated only $4 million of free cash flow during the first half.

The figures are unaudited and were released ahead of the group's half-year results, scheduled for 28 September 2026. Investors can read the original company announcement for the full statement.

Tullow Oil's key first-half figures

Metric	First half of 2026
Group production	Approximately 43.7 kboepd
Jubilee gross production	Approximately 70.8 kbopd
Jubilee net production	Approximately 27.6 kbopd
TEN gross production	Approximately 14.8 kbopd
TEN net production	Approximately 8.1 kbopd
Sales revenue	Approximately $496 million
Pre-hedge oil realisation	Approximately $95 per barrel
Post-hedge oil realisation	Approximately $86 per barrel
Pre-financing cash flow	Approximately $135 million
Free cash flow	Approximately $4 million
Net debt at 30 June	Approximately $1.4 billion
Liquidity headroom	More than $250 million

Production is expressed in thousands of barrels of oil equivalent per day, or kboepd. This combines oil and gas output into a single measure.

Jubilee and TEN beat expectations

Group production averaged approximately 43.7 kboepd during the first half, including around 7.5 kboepd of gas.

Performance at Tullow's core Ghana assets was encouraging. Gross Jubilee production averaged approximately 70.8 thousand barrels of oil per day, with 27.6 thousand barrels net to Tullow. TEN delivered gross production of approximately 14.8 thousand barrels per day, with 8.1 thousand barrels net to the company.

Both fields performed ahead of expectations.

Operational reliability was another clear positive. The floating production, storage and offloading vessels serving Jubilee and TEN achieved average uptime of more than 99%. High uptime means the equipment was available and operating for almost all of the period, reducing the production losses associated with unplanned shutdowns.

That performance adds substance to management's description of a strong first half. It was not simply a result of higher oil prices. The underlying assets also operated reliably and produced more than expected.

New Jubilee wells support production

Three production wells from the 2025-26 Jubilee drilling campaign have recently come onstream.

The J76-P well started production in June, with initial rates significantly above expectations. J77-P followed in July and J50-P came onstream in early August, with initial rates from both wells in line with expectations.

Tullow said interpretation of 4D seismic data had provided reservoir insights that supported successful target selection. Put simply, seismic data helps the company build a clearer picture of underground oil reservoirs and choose where to drill.

The campaign's final well, the J73-WI water injector, is expected to come onstream in September. Water injection is used to help maintain reservoir pressure and support oil recovery.

Tullow is also progressing a rig contract for a Ghana drilling programme of up to 10 wells in 2027 and 2028. Drilling is expected to begin in the second half of 2027, although the associated costs and expected production contribution were not disclosed.

Why free cash flow guidance increased

Full-year free cash flow guidance has risen to $170-250 million, based on an oil price range of $70-100 per barrel.

Management identified three main reasons for the upgrade:

• Positive production performance.
• Higher-than-expected oil price realisations.
• Progress on recovering receivables from the Government of Ghana.

Tullow achieved average pre-hedge realisations of approximately $95 per barrel across six first-half cargoes. Hedge costs reduced the average post-hedge figure to approximately $86 per barrel.

The company said oil price realisations averaged approximately $93 per barrel from January to the end of July. Its two latest cargoes, lifted from Jubilee and TEN in July, achieved an average of approximately $87 per barrel.

Tullow now expects 14 cargoes in 2026, comprising 11 from Jubilee and three from TEN. This includes two more Jubilee cargoes than initially guided in November 2025. Six cargoes were delivered in the first half, leaving eight planned for the second half.

This outlook is stronger than the one presented in Tullow's previous AGM trading update.

Cash flow was held back by refinancing costs

The headline guidance upgrade is positive, but the first-half cash flow figures require a closer look.

Tullow generated approximately $135 million of pre-financing cash flow, meaning cash flow before financing-related payments. Free cash flow was only approximately $4 million after $64 million of cash interest payments and $68 million of one-off refinancing transaction costs.

Those transaction costs were described as one-off, but the $64 million interest payment highlights the continuing financial burden created by Tullow's debt.

Gross debt fell by approximately $100 million to around $1.6 billion. This reflected a $148 million repayment connected with the April refinancing and a June cash sweep payment, partly offset by $48 million of additional debt and capitalised interest.

Net debt stood at approximately $1.4 billion at 30 June, while liquidity headroom was more than $250 million. The refinancing provides important context for the group's current balance sheet and is covered in more detail in this earlier article on Tullow Oil's refinancing and Ghana agreement extension.

Spending guidance remains unchanged

First-half capital expenditure was approximately $131 million, while decommissioning expenditure was around $13 million. Both were in line with expectations.

Full-year guidance remains approximately $200 million for capital expenditure and $25 million for decommissioning expenditure.

Tullow also received an additional $9 million after terminating its Kenyan royalty payments and back-in right.

Elsewhere, production from the non-operated Espoir field in Côte d'Ivoire was below expectations at approximately 0.6 kboepd following nearly two months of downtime. Tullow exited the licence on 24 July 2026, so this asset will no longer contribute to the group.

What investors should watch next

The strongest part of this update is the combination of operational delivery and a substantially improved cash flow outlook. Jubilee and TEN exceeded expectations, uptime remained above 99%, and the drilling campaign has produced encouraging initial results.

The main counterweight remains the balance sheet. Net debt of approximately $1.4 billion is still significant, and financing costs absorbed much of the cash generated during the first half. Recovering Government of Ghana receivables also forms part of the upgraded guidance, but the amount and timing expected were not disclosed.

Attention now turns to the half-year results on 28 September. Investors will want to see whether Tullow can convert its stronger production and cargo schedule into the guided second-half free cash flow, while continuing to reduce debt and maintain reliable performance at Jubilee and TEN.