By Ghana News

Copyright ghanamma

Tullow Oil’s proved and probable reserves fell by nearly 15 million barrels during the first half of 2025, driven by weaker-than-expected production performance at Ghana’s Jubilee and TEN offshore fields.

The company’s total reserves stood at 113.8 million barrels of oil equivalent (mmboe) as of June 30, down from 128.5 mmboe at year-end 2024, according to a reserves report published Thursday and audited by TRACS International Limited. Both figures exclude Tullow’s Gabon operations.

The 11.5% decline reflects 7.4 mmboe extracted during the first six months and another 7.3 mmboe in downward revisions tied to production performance—6.3 mmboe from Jubilee and 1.0 mmboe from TEN. Those revisions suggest the fields aren’t performing as robustly as earlier projections assumed.

For an oil company, reserves represent both financial value and operational lifespan. When reserves decline faster than production alone would explain, it raises questions about field management, reservoir behavior, or the accuracy of previous estimates. Tullow’s situation appears to involve all three factors.

The company holds a 39% equity interest in Jubilee, which averaged around 87,000 barrels per day gross production in 2024, giving Tullow about 33,900 barrels daily on a net basis. TEN, where Tullow owns 54.8%, produced approximately 18,500 barrels per day gross, contributing 10,200 barrels daily net to Tullow.

Those production levels matter because they generate the cash flow that keeps Tullow operational. But if the fields deplete faster than expected or production efficiency declines, the entire economic model shifts. The first-half revisions indicate something isn’t matching original forecasts.

Tullow points to a potential silver lining. Following a memorandum of understanding signed in June with Ghana’s government to extend production licences to 2040, TRACS estimates that 14.7 mmboe of Jubilee contingent resources and 3.5 mmboe from TEN could move into the 2P reserves category once extensions are formally executed.

Contingent resources represent hydrocarbons believed to exist but not yet classified as reserves because of technical, regulatory, or commercial uncertainties. License extensions remove some of that uncertainty, allowing auditors to reclassify the volumes as recoverable reserves with reasonable certainty.

That 18.2 mmboe potential addition would significantly offset the first-half decline, bringing reserves back above 130 mmboe if everything proceeds as planned. However, “if everything proceeds as planned” carries weight in Ghana’s oil sector, where regulatory approvals and contractual negotiations can take considerable time.

The license extension itself reflects confidence from both Tullow and the Ghanaian government that substantial resources remain in Jubilee and TEN. The original licenses were approaching expiration, creating urgency around extending rights to continue production beyond current timelines.

Partners in the fields include Kosmos Energy, PetroSA, Ghana National Petroleum Corporation (GNPC), and Explorco. All signed the memorandum of understanding, indicating alignment among stakeholders about the value of continued development.

Tullow also plans additional technical work to improve reserve estimates and identify new drilling opportunities. The company acquired new 4D seismic data in the first quarter of 2025 and has scheduled an Ocean Bottom Node survey for the fourth quarter. These technologies help map reservoir characteristics more accurately than older seismic methods.

“With the new 4D seismic data acquired in 1Q 2025 and an Ocean Bottom Node survey planned for 4Q 2025, Tullow expects to mature new projects and increase 2P reserves in Ghana,” the company stated in its announcement.

That expectation matters because Tullow’s entire operating focus now centers on Ghana following exits from other African markets. The company divested its Kenyan and Ugandan assets and is winding down Gabon operations, making Ghana performance critical to corporate survival.

The strategy concentrates risk. If Ghana production continues underperforming or if new projects don’t materialize as hoped, Tullow has limited alternatives. But the focused approach also allows management attention and capital to concentrate on maximizing value from proven assets rather than spreading resources across multiple countries.

Tullow is working with Ghana’s government on a Plan of Further Development for Jubilee covering the license extensions and additional drilling opportunities. These plans typically involve detailed technical analysis, economic modeling, and regulatory approvals before implementation.

The company committed to achieving net zero emissions for Scope 1 and 2 by 2030, adding another complexity to operations. Reducing emissions while maintaining production requires investment in cleaner technologies and operational changes that affect costs and timelines.

Tullow trades on both the London and Ghana Stock Exchanges under the symbol TLW, giving it visibility among investors focused on African energy. The reserves report constitutes inside information under UK market abuse regulations, meaning it could materially affect the share price.

For Ghana, Tullow’s performance matters beyond corporate financials. The Jubilee and TEN fields generate substantial government revenue through royalties, carried interest, and corporate taxes. Weaker production or shortened field life would affect fiscal planning for a country that depends significantly on oil revenues.

The broader context includes volatile oil prices, energy transition pressures, and competition for investment capital in an industry facing long-term demand uncertainty. Tullow must balance maximizing current assets against a future where fossil fuel demand may decline.

The first-half reserves revision creates pressure to demonstrate that the second half and 2026 will perform better. If production continues disappointing relative to forecasts, it could trigger another downward revision that would further reduce the company’s asset base and financial flexibility.

Investors will be watching whether the license extensions get finalized quickly and whether the 18.2 mmboe of contingent resources actually converts to reserves as TRACS projects. They’ll also monitor third and fourth quarter production to assess whether the first-half underperformance was temporary or signals a more persistent problem.

The Ocean Bottom Node survey planned for later this year could provide clarity. This technology offers high-resolution imaging of reservoir structures, potentially identifying bypassed hydrocarbons or optimization opportunities that could improve recovery rates.

For now, Tullow faces the reality that its reserves declined more than production alone would explain during the first six months of 2025. Whether technical solutions, license extensions, and new drilling opportunities can reverse that trajectory will determine if the company’s Ghana-focused strategy succeeds.

The reserves report, while containing concerning elements, isn’t catastrophic. The company still holds over 110 mmboe in a country with functioning infrastructure and supportive government relationships. But the downward revisions indicate challenges that require technical competence and operational improvements to overcome.

Ghana’s offshore oil sector has matured since Jubilee’s 2010 startup, providing lessons about reservoir management and production optimization. Whether Tullow and its partners apply those lessons effectively will show up in future reserves reports and production data.