Tullow Oil says it will continue to engage with the government of Ghana to resolve a dispute over a $ 300 million tax bill.
The oil producer revealed the tax bill from the Ghana Revenue Authority (GRA) its latest trading update ahead of its 2022 full-year results in March.
The company said it had received both revised and new tax assessments from the GRA to pay further tax on historical trading but it believes these are without merit.\
Cash taxes are expected to be in excess of $300 million in 2023 (at $80/bbl) as historical capital allowances in Ghana will have been fully utilised in the first quarter of 2023. Tullow has received both revised and new tax assessments from the Ghana Revenue Authority throughout 2022, with these assessments not resulting in an increase to the overall exposure previously disclosed,” the trading update reads.
“Tullow believes these assessments are without merit and continues its active engagement with the Government of Ghana with the aim to resolve these disputes on a mutually acceptable basis”.
Tullow is the second multinational company to dispute a tax bill from the GRA this month.
Revenue
Tullow reported revenues of £1.38bn ($1.7bn) in 2022, at an average realised oil price post-hedging of $87 per barrel, with a free cash flow of $469m.
This was ahead of guidance and driven by the increased equity interest in Ghana ($126m) and excluded the impact of the Norwegian arbitration payment ($72m).
The oil trader reduced year-end net debt to $1.9bn from $2.1bn the year before, while capital and decommissioning expenditures were priced in at $354m and $72m respectively.
Looking ahead to this year, Tullow announced it will invest $400m over 2023, including $300m on its flagship fields in Ghana and $90m in decommissioning projects.
Tullow expects to produce between 58,000 and 64,000 barrels per day, broadly in line with last year.
Meanwhile, cost cuts and a focus on its fields in Ghana means Tullow is now presenting a guide of $700-$800m in free cash flow for the 2024-2025 period – if an oil price of $80 a barrel is realised.
Strong operational delivery, rigorous focus on costs and capital discipline, the increased equity in our key operated fields in Ghana and higher oil prices drove material, expectation-beating free cash flow generation in 2022, accelerating the group’s deleveraging towards a net debt to EBITDAX ratio of 1.3 times by the year-end,” said Tullow Oil Chief Executive, Rahul Dhir.
