Good morning, all, and thank you very much for dialing into our half-yearly results today. We've got a very focused update, with the year progressing well, so as we're delivering on our operational financial targets, and importantly today, you'll hear us, we'll reiterate our 2024 cash flow guidance. But before we kind of get into the results, I just wanted to take a minute and remind ourselves of our vision to build a truly unique Pan-African platform, that's delivering material benefits and value for our host nations and communities. I think all of you know the scale of resources in Africa is vast, and there's a huge potential for Africa to play a very important and a growing role in the energy mix.
It's now widely acknowledged that African nations, they have the right to benefit from their natural resources. Within this context, as you know, we have a track record of improving operations, and we've built up a pretty unique offshore operator skill set, and that's really very relevant to the opportunities that we see that's emerging in Africa. This opportunity set is driven largely by divestment of mid- to late-life assets by the IOCs. Our strong conviction is that we can bring our skills to these opportunities and, importantly, to our host nations that are looking for a trusted partner to improve and extend the life of their important assets.
So, let me now hand over to Richard, who will go over the results and the financials, and then I'll come back, and I'll talk about the operations. Thank you very much.
Thank you, Rahul, and good morning. I'll now run through our strong first half financial results, where continued operational and financial delivery has resulted in positive trends in all of our key financial metrics compared to the first half of 2023. We have seen an increase in production following the completion of the Jubilee South East project in the second half of 2023 and also supported by the almost flat production on TEN through excellent reservoir management and facility uptime. Realized oil prices are also higher, driven by both higher dated Brent prices and lower hedge giveaway, with the legacy hedge program now fully closed out. Higher production and higher realized prices have contributed to a 180% increase in profit after tax to $196 million. Capital expenditure is also lower in the first half of 2024.
This is driven by the completion of the Jubilee South East projects in the second half of 2023. Net debt has also reduced compared to June 2023, despite the negative free cash flow in the first half of this year. This is driven by the significant free cash flow delivery in the second half of 2023. We'll see the same trend in 2024, which I'll cover on the next slide. So, if we now move on to the outlook for 2024, our guidance remains broadly unchanged. As previously indicated at the AGM, we expect to be at the lower end of our production guidance, driven primarily by the performance of the J69 well in Jubilee, which Rahul will touch on shortly. In terms of CapEx, we expect to be $20 million below our previous guidance.
This is driven by the continued top-quartile drilling performance in Ghana, which has enabled us to release the rig earlier than planned. There's also been a reduction of planned expenditure in Gabon. In terms of decommissioning costs, these are expected to be $70 million, with the majority of the spend happening in the second half of the year. This is primarily associated with the commencement of the Mauritania decommissioning campaign earlier than planned. We expect to deliver $200 million-$300 million of free cash flow in 2024. The exact position within this range will be driven by the timing of a year-end cargo. Due to the exceptional performance of TEN, we've gained one cargo compared to plan this year, which has offset the expected slippage of a Jubilee cargo into early 2025.
As with 2023, free cash flow will be significantly second-half weighted, and as you can see by the bars on the left-hand side of the slide, this is primarily driven by the phasing of cash tax payments, with over $300 million paid in the first half, versus approximately $50 million expected to be paid in the second half of the year. The split of CapEx also contributes to the second-half weighting, with the completion of the drilling campaign in the first half, and this will be partially offset by the spend on the Mauritania decommissioning campaign in the second half of the year. Our free cash flow delivery should result in us being below $1.4 billion in net debt by the end of this year.
Now, let me talk about how we have strengthened our balance sheet over the last few years and how our near-term targets for further improvement. Since the end of 2020, we have seen a 30% reduction in net debt. Not only have we reduced the amount we owe, we have demonstrated our ability to raise capital, with $2.7 billion gross debt raised in that period, in varying market conditions and from varying sources. This was demonstrated most recently with the $400 million facility from Glencore, raised in 2023, which means our next uncovered debt maturity is in May 2026. As at the end of June, we had $700 million of liquidity headroom, and as I've just covered, we expect to generate $200 million-$300 million of free cash flow this year.
Looking ahead, we target reaching net debt of less than $1 billion and gearing of less than 1x in the near term, and remain set to continue to deliver sustainable levels of free cash flow into the medium term. Our legacy hedging program has now closed, and since June, we are only paying hedge premium, materially reducing the monthly outflows. Our policy going forwards continues with 60% hedged in the first calendar year, with no more than 40% upside giveaway. These steps, combined with improved market conditions, resulted in material improvement in the pricing of our debt in the last 12 months. And with the Branch Profits Remittance Tax arbitration resolution expected before year-end, we are in an ever-improving financial position and are proactively considering various options to optimize the capital structure and manage our debt maturities. I'll now hand back to Rahul.
Okay, thank you, Richard. I wanted to kind of just reflect on, before getting into the operations, kind of our safety performance, because as you know, the safe and responsible operations of our assets, that's always our first priority. In the first half of 2024, I'm pleased to say we've had no lost time injuries. However, we had to deploy our very robust oil spill response capabilities in the first half of this year, due to 2 losses of primary containment that resulted in oil being released to the sea. What I'm pleased to say is that we dealt with this very quickly, and there was no major impacts, and as always, we're undergoing a very thorough investigation, which will have actions to prevent any further recurrence.
Also, on a positive note, we ended the drilling campaign without any recordable EHS incidents, so that's delivering over 1,000 days of safe operations, and that's a real achievement and a testament to our safety culture. Let me lead on to Jubilee. So as I just mentioned, that we've now finished the latest drilling campaign at Jubilee, and if you remember, this program had started in April 2021, and we've completed, through the program, 21 wells across Jubilee and TEN. As you know, we've had very good drilling performance, and the program was really completed about six months ahead of what we had actually planned. And overall, I would say it's been a very successful program, with the majority of the wells, they've performed in line with expectation.
Also pleased to share that we continue the strong operating performance at Jubilee, so with around 99% uptime at the FPSO. Now, you know, the production at Jubilee, it benefits from consistent pressure support from water injection. I've talked about this before. And there's, as you know, there's a very strong focus on improving water injection performance. And in the first half, that sort of continued. We had rates reaching record highs of over 280,000 barrels of water injected per day. We've had experienced some temporary periods of downtime in the water injection system. Now, if I look back at the first half, Jubilee averaged about 90,000 barrels per day of oil production, and we expect to sustain this rate for the full year.
And now, candidly, this is below our expectations, but that's primarily attributable to the poor performance from one producing well that Richard also referred to, which is J69. Now, this well was brought on stream in February of this year, and there's been some additional impact from the interruptions in water injection that I mentioned, but J69 is the most significant impact, and it's producing significantly less than what we expected. Naturally, there'll be an impact on the reserves that are associated with this well, as well. Now, we have a clear understanding that the underperformance of this is due to lack of pressure communication from water injection in this specific area. We're clear it is a localized issue. In the rest of the field, the pressure maintenance is working well.
And in fact, the improved rates of water injection that I mentioned and the start of a new water injector, which is J70 well, that's providing good uplift in reservoir pressure, and it's already offset the decline. So, we're working hard now in the drilling break. We have some time. We're gonna set ourselves up for continued success for the next drilling program. So, what are you doing - what are we doing in this period? Number one is our focus on operational excellence will continue. Big emphasis on sustaining water injection reliability and high FPSO uptime. What that requires is a continued focus on asset integrity, on maintenance, and so, we're planning for a maintenance shutdown in 2025 for Jubilee.
The other big focus we have in this drilling break is gonna be on the subsurface front. On that one, we're gonna integrate the results of the whole recent program performance into our reservoir model, so, we'll have more updated reservoir models. We're also planning a 4D seismic survey that's gonna be shot in early 2025. Just to put that in perspective, remember, the last 4D seismic we had in Jubilee was in 2017. The new survey will give us up-to-date view of the subsurface. It will support drill candidate selection, it'll help optimize the well placement. Also, on the gas, we now have an extended interim gas sales agreement in place at $3 per MMBtu, and that's until the fourth quarter of 2025.
So, the good thing with this is it gives us, more flexibility. We continue discussions with the government, but we're also, considering alternative, third-party offtake opportunities that will help us realize the potential, long-term revenue stream from gas in Ghana. So, when you take all of this together, it reinforces our confidence in the broader opportunity set and the pipeline of projects that's available to sustain production in Jubilee, out to the end of the decade. Let me now move on to TEN, and to our non-operated, portfolio. TEN has been performing well. Production is beating expectations. In the first half, they averaged about 19,000 barrels of oil per day. And remember, we've not added any new wells at TEN.
But the focus in TEN has really been on reservoir management, on production optimization, and on our sustaining our operating performance. And we've continued to have really good response from both Ntomme and Enyenra wells, which are both performing well. So, as a result, we expect the full year gross production at TEN to be slightly higher than our expectation at 18,000 barrels of oil per day. Production from our non-operated portfolio was in line with expectations during the first half of the year, and again, we're reiterating our full year guidance, which remains unchanged at 11,000 barrels of oil per day. Just reflecting on the kind of very sad incident that we had, and talked about this at the AGM, with the Perenco-operated Simba field in Gabon in March 2024.
As a consequence of that, production has been shut in while there is focus on investigations and also remediations. We're expecting kind of field start up before the end of the year, once all the works and the investigations are safely completed. Now, we had some loss of performance from Simba that's been offset by improvements in other fields, including Ezanga and Echira, and just speaks to the kind of, you know, robustness of the portfolio there. Excuse me. The ILX program in Gabon also continues, and we're currently drilling a new well. It's the Simba-G well on the Simba license, and that's again, depending on the success of that, but it sort of illustrates the low-risk opportunity set that exists in Gabon.
And again, if this is successful, it can add incremental production very quickly to the portfolio. It pays back in less than a year once it's on stream. Moving on, we continue to progress along our pathway to net zero by 2030 on both Scope 1 and Scope 2 emissions. We've talked a lot about how we're decarbonizing our operated assets. That's an important driver. But in addition to that, it's a very significant step we've taken this year, which will address what are the hard-to-abate residual emissions. So, as part of that, in May, we took FID in partnership with the Forestry Commission of Ghana on a nature-based carbon offset program.
And what this is, is it's a high integrity, it's a jurisdictional-based, what they call, it's quite a mouthful, it's reduced emissions from deforestation and degradation, so, these are called REDD+ programs. It's a big scale program. It covers 2 million hectares of land across, what's the Bono and the Bono East regions of Ghana. We will invest over 10 years, about $90 million into implementing the program, and that's gonna generate up to 1 million tons per year of certified carbon offsets. And that's very much in line with our net zero program.
Now, we've taken a hands-on approach, and it's a unique program because it not only offsets the emissions, but it also has a positive impact in Ghana that's in line with our shared prosperity strategy, which is impacting over a million local people who will potentially benefit through the jobs, through associated opportunities, and also through better forest conservation. So, we're really excited about this. It's a great, great step forward. Let me now kind of just to wrap up. So, where are we? So, we, you know, 2024 is going well. We continue to have good operational performance. We're maintaining 2024 production, free cash flow guidance. We are now entering into, post a lot of the infrastructure spend that we had, we're entering into a period of lower capital intensity.
We're taking the time that we have now with the drilling break to prepare for continued success for the next campaign in Ghana. We retain, what I hope you come to recognize, is a very sharp focus on cost and capital discipline. We continue to live our mantra of every dollar that matters and every barrel counts. As we look to the second half, as Richard said, we got some important events coming up. We anticipate the outcome of the Ghana Branch Profits Remittance Tax arbitration, and we're very confident that this tax is not applicable to Tullow. I think also importantly, again, reiterating what Richard said, the balance sheet, as you see, is continuously improving.
We have no near-term maturity, and with a strong free cash flow outlook, and the value of the underlying assets, it means that we're very well positioned to optimize our capital structure at the right time. So, our focus, which is on reliable performance, consistent delivery, which is really what the message is of this results, that support the very compelling and unique value proposition that we offer. I think we continue to be a highly cash-generative business that will enable us to continue de-leveraging, while also investing in both organic and inorganic growth. And with this continued progress, I believe we should be able to consider returns to shareholders, in the future. So, I want to thank you again for your attention, and we're, Richard and I, happy to take questions.
Thank you very much, Rahul. We'll now take some questions online on the telephones. Press star one on your keypad to join the queue for questions. We'll just wait a moment until the queue forms. Okay, we'll take our first question from James Hosie at Shore Capital. Go ahead, James.
Hi, good morning, everyone. Thanks for taking the question. I'm just-
... Excuse me, I'm just wondering how long you think you can sustain Jubilee production at 90,000 barrels a day without more drilling? And just noting your comments at the 4D seismic survey, due to complete early 2025, does that mean we should be assuming no more drilling at Jubilee until, say, the second half of 2025?
So, I think what the guidance we're giving for this year, James, firstly, it is good to hear from you. I think the guidance we're giving is we're gonna of 90,000 barrels a day through this year. We will expect a decline starting in 2025. But also, what I said, James, is that we're focusing on reservoir management, we're focusing on production optimization. And you've seen what we've been able to do in TEN in terms of leveraging all of that to manage the decline. So, expect us to continue those efforts on Jubilee as well. But certainly we have visibility through the rest of the year, where we feel we can sustain production at current levels without drilling new wells.
In terms of the restart for the next program, I think there is a big focus on subsurface, so, we are refreshing our reservoir models. We're gonna shoot 4D seismic early next year. And, we're gonna be looking to restart, I would say sometime kind of second half of 2025, early 2026, and that's the timeframe that we're working to.
That's great. Thanks very much.
Great. Thanks, James. So, just to reiterate, if you'd like to ask a question on the telephone, press star one, and if you'd like to ask a question through the webcast, you can press Request to speak on the webcast. We'll just give that a moment. Next question is from Mark Wilson at Jefferies. Go ahead, Mark.
Yes, thank you. Good morning. A question for Richard here. I was just wondering how that the maturity of the RCF impacts your plans in the second half. Do you need that liquidity headroom to be in place ahead of when that RCF undrawn matures at the end of the year? Thank you.
Yeah. Good morning, Mark. So, look, we've got obviously $700 million of liquidity headroom as we sit today, where we generate a significant amount of cash in the second half of this year, which will provide increased liquidity support. And then, look, our plans on refinancing, as I said, we're looking at a broad range of options. We're working up those options from a refinancing perspective, and we'll be able to, you know, opportunistic, pull the trigger on one of those, when, you know, the time's right from both our perspective and markets. And whether that includes an extension of the RCF or something else, you know, we'll determine that at the right time.
Got it. Okay. Thank you. Also, then, Rahul, I read, I heard your opening remarks regarding African countries and the expertise that Tullow brings, and I read that as potentially looking at M&A options or new entries. Am I overthinking it? That's my question.
No, I see... No, you're not. I think that in some ways, I mean, the model is very simple, right? We are today very firmly in the space of extracting value from mid to late life assets. Everything that we're doing, whether it's reservoir management, production optimization, capital efficiency costs, you know, operational uptime, very much relevant to the opportunities that we see in the African continent. So, it's a kind of a statement in a sense, kind of, of the obvious. I think you see the market where majors are reducing their exposure to these assets, so there are kind of unique opportunities. I think the point is, what Richard and I have emphasized is that we are gonna remain very disciplined about how we allocate capital.
So, if you say, "I'm gonna deliver, I'm gonna allocate X dollars of value of capital at a 40% IRR," all we're saying is that we are now introducing the flexibility to say we're gonna look at both organic and inorganic opportunities across which we allocate capital, but that discipline to capital allocation will remain. So, from an investor point of view, you're simply saying: I'm exposed to a larger opportunity set through which these guys are gonna allocate capital with the same commitment to returns or to profitability.
Okay, very clear. I'll hand it over. Thank you.
Thanks, Mark. Our next question is from Nikhil Bhat at J.P. Morgan. Go ahead, Nikhil.
Morning. Thanks, Mark. And thank you for hosting the call. I had about three questions. Firstly, on the Ghana arbitration verdict, is there a date by when the court is compelled to give a verdict, or by when, you know, by when you definitely expect a verdict? Just curious on the timeline. Secondly, I didn't see you reiterate the guidance of generating $600 million free cash flow at 2024-2025. I'm wondering if that's still on the table. And then lastly, I don't know if I misheard this, but I thought I heard a planned Jubilee maintenance shutdown in 2025. I was wondering if you could elaborate on how long do you expect this to last and what happens to production at that time?
So, Nikhil, let me take the last one, and then Richard can take the first. It's very simple, like, we periodically will actually shut down production for a small period, which allows us then to work on plant maintenance, asset integrity, equipment upgrades, and so on and so forth. So, that's. We haven't finalized the duration of that yet, you know, but typically that's a process that we'll go through over the next few months. But this will be approximately in the sort of two-weeks-ish range, is typically. But don't take it as guidance right now, because we haven't done all of the planning work around it. And during that two-week period, it is a shutdown, so production goes to zero. And if you're familiar with refineries, it's very similar to what refinery turnarounds are.
Sure. Thanks, Rahul. And good morning. We should get a result on the, on the Ghana arbitration, no later than, some point in November. In terms of the, free cash flow guidance, what we're- where we're focused on is getting to $1 billion of net debt and 1x gearing, which, which is essentially the, you know, the, the cash flow guidance that we provided is the number to get us to that position. Where we're at today is whether that is the, the 31st of, December 2025, or due to the timings of liftings, whether that's, some point in early 2026. We, we can't quite determine at this stage, but we expect it'll be very much in the near term.
That's it. Thanks for the call.
Thanks, Nikhil. We've got time for one more question, and we'll take a follow-up question from James Hosie at Shore Capital. Go ahead, James.
Yeah, thanks. I'm back, back for more. Just as a follow-up, really, on the Ghana branch profits tax arbitration. I'm just wondering, could we anticipate a binary outcome, either Tullow has nothing to pay or owes $3 million? Or could we end up with a ruling that's somewhere in the middle, with a smaller liability due?
Yes. So, there is, there's a, I suppose there's a range of possible outcomes. Obviously, the one that we expect is that we'll be successful and then nothing will be owed. And then if there is a result where it rules against us, I suppose there's two branches from that. One is that the panel will say we're unsuccessful and rule on a number. That number could be less than the $320, which has originally been claimed, or they could then say that they find against us, but they can't rule on a number, which will then push us into the Ghana court process.
But I think as we previously stated, if we're unsuccessful, we have a number of avenues to continue to explore within the Ghana court process, where we'll continue to dispute this claim.
So it's-
Okay.
End of it, if it's ruled against-
Okay, thank you.
If it's ruled against us, then it could take a long time for resolution.
Correct.
Okay, that's clear. And just, is there an extent to which this arbitration would be a precedent for your other tax disputes?
Let me take a go at that. So legally, they're all very separate. And, but I think there is a nd we could all speculate, I think, that certainly, it would, we believe that a positive outcome on, in our favor on the branch profits, I think, it certainly would reinforce what we and many in the government believe, that there is a better way and an amicable, amicable way to resolve the others.
Okay. That's clear. Thank you for that, and thanks for your time.
Okay.
Well, that brings our focused presentation and the Q&A to an end, today. Thank you very much, everyone, for joining us. Thank you and goodbye.