Good morning, everyone, and thank you for joining us today. I'm Richard Miller, CFO and also temporary interim CEO, whilst the process to find a full-term replacement CEO is finalized. That process is proceeding well, and it won't be long before I sit here just as the CFO. I would like to take this opportunity to thank Rahul for his four years of service at Tullow, and to my colleagues on the senior leadership team for their support during this period. Now, if we move on to the presentation, we have strong momentum within the business, driven by progress in 2024, achievements year to date, and a clear set of catalysts and levers in 2025 to unlock the full potential of Tullow. 2024 saw continued deleveraging, a successful RCF extension.
In terms of operations, we did see challenges with production in Jubilee in the second half of the year and a reserve write-down, but we did continue to see top quartile operating and drilling performance at the same time as reducing our emissions by 8%. So far in 2025, we've delivered the successful BPRT outcome, repaid the 2025 notes, and yesterday announced the disposal of our Gabon business for $300 million. We have also successfully completed the 4D seismic campaign ahead of schedule and under budget. As we look into the balance of 2025, our focus is on completing the Gabon disposal to accelerate our deleveraging, resolving the remaining GRA arbitrations, and most importantly, completing the refinancing of our capital structure. Operationally, we are excited about the return to drilling to improve production and to utilize the 4D seismic data to organically grow our 2P reserve base.
With delivery of these catalysts, the turnaround and transformation of Tullow will be complete. I will now move on to our financials. This slide covers our full year results and our guidance for 2025. We produced 61,000 barrels of oil equivalent per day in 2024. This was impacted by the J69 well result and steeper-than-expected decline in the second half of 2024. This was due to water injection performance and an increase in water cut on certain wells, and I'll cover this later in the presentation. This was partially offset by improved production on TEN, driven by production optimization from the team in Ghana. For 2025, we are guiding a range of 50,000-55,000 barrels of oil equivalent per day.
This takes into account the planned maintenance shutdown at Jubilee and a short drilling campaign in Ghana, consisting of one producer and one injector, with the primary focus on reducing natural decline. In terms of CapEx, we spent $230 million in 2024, with nearly 90% allocated to our producing assets, and the majority of that spend was on completion of our drilling campaign ahead of budget and ahead of schedule. For 2025, we are guiding $250 million of spend, which I'll provide more details on later. In 2024, we completed our decommissioning campaign in Mauritania ahead of budget. The decommissioning costs were reduced by 50% in 2025 to $30 million, with approximately $15 million on our activities in the U.K. and $15 million for provisioning in Ghana and Gabon.
Organic free cash flow for 2024 was $156 million, impacted by the delayed receipt of $50 million gas payments in Ghana, which we expect to receive this year. Organic free cash flow for 2025 is guided at $100 million at $70 a barrel, and for every $5 per barrel increase, we expect an extra $50 million of free cash flow. We finished last year with $1.45 billion of net debt and expect to be around $1 billion of net debt by the end of 2025, following organic free cash flow and the receipt of Gabon disposal proceeds. Now, if we look a little bit more closely at our capital structure, this slide lays out the pathway in 2025 to a sustainable capital structure.
To start with, we have highly valuable assets with an independently audited 2P NPV of $2.6 billion, including a potential for over $100 million from the Uganda contingent payment. On later slides, I will cover our confidence in specific near-term actions to help increase this valuation. We also have a gross net debt balance, which has reduced materially, with net debt down by $1.8 billion since the end of 2019, supported by both organic and inorganic cash flow. We expect our cash flow generation in 2025 will reduce our net debt by over 30% to $1 billion. As a result, we will realize significant cost savings on interest going into 2026. In the near term, our hedge portfolio provides downside protection for 2025. Our plans to refinance our capital structure are progressing well, and we'll look to complete this as soon as possible in 2025.
In addition, discipline around costs remains key to achieving these plans, and that will continue this year and beyond. A huge amount of work has been done to optimize our cost base, but the work does not stop here. In 2024, our net G&A was approximately half of what it was five years ago. This year, we expect to realize a further $10 million in annual net G&A savings, and we'll be targeting further material reductions in G&A for 2026 and beyond, which is not currently captured in this chart. We have made substantial progress in our plans to transform the fixed cost base at TEN, including the FPSO, which will produce material ongoing savings. OPEX is also a key area of focus, with the aim to deliver required maintenance and integrity activity for a mature field in the most cost-effective manner.
In terms of CapEx, the pie chart on the top right emphasizes our strict capital allocation policy, with 90% of 2025 expenditure allocated to our producing assets, with approximately $100 million spent on drilling in Ghana this year, with a further $15 million spent on the 4D seismic campaign across TEN and Jubilee, supporting the maturation of resources to reserves. I will now move on to talk about our operations, including that resource maturation plan. We remain focused on driving operational improvements across our producing assets in Ghana. Our efforts are multifaceted, but I want to focus on three key pillars that have and will drive production and value improvements. Firstly, in relation to drilling, in the first half of 2024, the Ghana drilling campaign was completed safely ahead of schedule and resulted in 18 new wells coming on stream in Jubilee since 2021.
This drilling campaign, the non-productive rig time, was reduced significantly from the previous campaign, from 33% to just 9%, resulting in material cost savings for the business. The second area is water injection, which is critical for maintaining pressure support in a mature field. We have successfully increased the water injection capacity at Jubilee from 220,000 barrels a day in 2020 to 300,000 barrels a day today. Notwithstanding this, the increase in capacity, we did inject lower volumes than anticipated in 2024 due to challenges with power generation. These challenges have now been addressed, and we have seen significantly improved water injection performance in 2025, helping to replace voidage and stabilize production. Finally, facility uptime is a key metric of operational performance, which was top quartile in 2024 across both of our operated facilities, with TEN achieving 97% and Jubilee 98%.
The asset integrity and maintenance scope planned during our shutdown in 2025 is essential for sustaining this performance. Now, moving from the work we have done to the work we are planning to do on Jubilee to grow our reserve base. The chart on this slide shows the changes in our 2P reserves during 2024 and a subset of our audited 2C resources. Following production performance in 2024, we have made a reserve revision in Jubilee. Our view of the field oil in place remains the same, which is supported by newly drilled wells being close to prognosis in terms of reservoir encountered. However, production performance has shown increased water cut occurring. As a result, we have revised our review of expected recovery from our existing well base, which in isolation would leave a volume of bypassed oil unrecovered.
However, we have responded to these challenges and developed a clear set of material reserve adding opportunities to be delivered in the near term. Firstly, we expect to sanction the installation of an artificial gas lift this year, which will help stabilize and boost production rates across our well base, extend the producible life of wells cutting water, and add significant 2P reserves. Secondly, we have just completed shooting a 4D seismic campaign across both Jubilee and the Ntomme field in TEN. This will be a step change in our understanding of pressure and fluid movements within the reservoirs and crucially help identify the areas of bypassed oil to target with infill drilling. The number of commercially economic targets is expected to justify at least two further drilling campaigns on Jubilee and TEN within the current license period, providing material reserve additions as these opportunities are matured.
Finally, further evaluation of technically recoverable resources points to a significant economic potential beyond the current plan of development. I'd now like to move on to TEN. Production optimization activities in 2023 and 2024 have successfully mitigated natural declines without drilling any new wells. During 2024, we had a positive revision on TEN 2P reserves related to the substantial progress made towards a material reduction in the TEN fixed cost base. As we look forward, there is a significant potential for reserve additions from Ntomme infill drilling, a field that has already produced over 70 million barrels and still operates at very low water cut levels, which speaks to a significant remaining oil volume. The new 4D seismic survey will be instrumental in identifying where to place infill producers and locate water injection wells to improve pressure support.
There is also a well-defined material gas resource that is producible across Tweneboa and Ntomme that could create additional long-term revenue stream for the company, with options being explored both with the government and third parties to ensure this resource gets commercialized. Now, if I move on to our portfolio of non-core assets, which have the ability to drive near and medium-term value. This slide highlights the number of material incremental opportunities to realize value or mitigate our financial exposure in the near and medium term. Yesterday, we announced that we'd agreed binding heads of terms for $300 million sale of our Gabonese assets to the Gabon Oil Company. This transaction will be accretive to both equity and leverage and accelerates our deleveraging pathway this year. Uganda royalty has the potential to add significant cash flow for the duration of the license, also providing uncapped access to oil price upside.
First oil is expected in the near term, so first payment could be as early as 2027. The Dusafu contingent payment, while smaller, still has the potential to deliver $5 million of incremental annual cash flow in the next few years. Elsewhere across the rest of our portfolio, a rigorous approach to capital allocation applies, and we'll work hard to look to accelerate the extraction of value and mitigate exposure in the near term. Our purpose as a company is to build a better future through responsible oil and gas development. This next slide highlights some of the work we are doing to achieve this alongside our operations. We recognize our key role in Africa's energy transition and remain committed to host country governments to be a responsible operator. We are focused on three key pillars: people, net zero, and environment.
Our strong positive safety performance continued in 2024, where we continue to operate with top quartile total recorded injury frequency of less than one. Our shared prosperity programs focus on employment opportunities in our host countries, and to support this, we launched Tullow Agri Ventures that aims to create 1,500 direct jobs over a two-year period. We also continue to make progress on our net zero commitments and are on track to eliminate non-routine flaring by the end of this year. We also made significant progress in our unique carbon offset project, which will mitigate those residual emissions. We've worked with the Ghana Forestry Commission and took FID on that project last year. Recognizing the increased focus on preserving nature and building on our existing commitments to minimize our environmental footprint, we have set a no-net-loss nature ambition.
In terms of our decommissioning campaign in Mauritania, this is now behind us, and we have after accelerating it into 2024. Now, if I move on to our conclusion, we have a very clear set of actions for 2025, which include completion of our refinancing, optimizing the production at Jubilee and TEN, and organically growing our reserve base. We remain focused on cost and financial discipline, prioritizing high returns and focusing on investments that add value. At the same time, we are accelerating the deleveraging of the business with the sale of our Gabon assets to reach net debt target by the end of this year. As we continue to reduce our debt and optimize our capital structure, our balance sheet will grow stronger, and we'll be well positioned to create lasting economic and social value for all stakeholders.
Finally, I would like to thank our shareholders for their continued support as we lay the foundations this year to realize the potential of the business and generate the value. Thank you, and I will now take some questions.
Thank you, Richard. As a reminder, if you'd like to ask a question via your telephone, please press star one on your email. Our first question comes from Matt Cooper at Barclays. Go ahead, Matt.
Great. Thank you very much. Just to say well done on the Gabon deal. Is it fair to say that that's probably now it in terms of near-term disposals, or might you be open to reducing your interest in the Ghana assets?
And then the second question, if you do not mind, I wonder if you could give a bit more detail on the timing and potential quantum of a 2C into 2P conversion at Ghana this year on the back of the 4D seismic. Thank you.
Thanks, Matt. In terms of near-term disposals, the slide that we had on our sort of non-core assets really categorizes the various opportunities that we have within the near and medium term to realize value, either by sort of holding those assets or potentially looking to monetize them ahead of schedule. We will focus, if we can achieve valuations that are attractive both from an equity and a debt perspective, then we will proceed on those opportunities. In terms of timing and quantum of 2C to 2P conversion, this year we are focused on a number of activities.
We hope to see a reserves uplift from the sanctioning of the artificial gas lift project, which we will look to sanction by the end of this year. Not only will that be a positive from a reserves perspective, but it should have a strong boost for near-term production, particularly given some of the water cut that we have talked about on Jubilee. In terms of the 4D seismic, we should get that data around the middle of the year. The team are working hard to process that data and start working up options. In terms of those sort of at least two future drilling campaigns, we will probably be looking to book those reserves over the next couple of years as those opportunities matured.
Okay, that is helpful. Thank you.
Can you give any kind of color on the likely content of those, like in terms of how much reserve you tend to book per well?
Ultimately, we'll need to do the work on the individual opportunities to see the quantum of reserves we'll book, and it will vary between producer and injector. But anywhere between a range of 5 million-8 million barrels per well is probably a good prognosis based on wells that we've got currently booked within the 2P campaign. That's on a gross basis.
Okay, that's brilliant. Thank you. Appreciate that.
Thank you, Matt. Our next question comes from Sam Wahab at Peel Hunt. Go ahead, Sam.
Thanks for taking my question and running through the presentation today. My question, the first question is around the potential for inorganic expansion.
It looks that following the sale of the Gabon assets, that it's more of a focus on Ghana and Ghana only. With the target of reaching net debt of $1 billion by the end of this year, does that mean that for the moment or for the near term at least, that inorganic expansion or any other acquisitions are off the table until the balance sheet is in a certain place? The next question, again, back to the balance sheet, is around the refinancing of the 2026 bonds. Can we assume that conversations are ongoing and have already started? Can you give us sort of a little flavor of what the temperature is with the bondholders as it stands and what we can expect in terms of timing for completion of that?
Thanks, Sam.
Look, in the near term, our focus is very much on the catalysts that we've set out today. It's about growing reserves. It's about maximizing production, continuing the deleveraging, and getting a refinancing done. In terms of M&A from an acquisition perspective, that's not something we'll be focused on in the near term. We need to complete the transformation of the balance sheet, get the company into a stable position, and be in a position to consider returns to shareholders before we look to grow the business further. In terms of refinancing, as you'd expect, plans are very well progressed. We're focused on talking to private capital providers, and those conversations are progressing well, both in terms of banks, traders, and other capital providers. Obviously, we're keen to get that refinancing completed as quickly as possible.
We think the disposal of Gabon that we announced yesterday and the impact that will have on reducing the total refinancing asked is an incredibly important step in that process.
Great. That's great. Thank you.
Thank you, Sam. Our next question comes from James Hosey at Shore Capital. Go ahead, James.
Hi, good morning. Thanks for taking my question. I guess it's on Gabon, and I was just wondering if you could quantify how much Gabon was estimated to contribute to your 2025 free cash flow guidance for $100 million-$200 million. I suppose asked another way, it's like, what's the free cash flow generation of the core Ghana business?
Yeah, thanks, James. Free cash flow from Gabon in 2025 was essentially neutral. There's a relatively significant capital campaign, plus the decommissioning payments, and also the sort of, I suppose, level of operating costs.
It is break-even at $70 a barrel. There will be no impact on 2025 free cash flow from the disposal.
That's great. I guess just one minor sort of follow-up is on your oil-price hedges. I mean, do any of those sit within the Gabon subsidiary and therefore move over to the buyer, or are all the hedging held elsewhere in Tullow?
All the hedging is held at a corporate level in Tullow.
Great. Thank you very much.
Our next question comes from Mark Wilson at Jefferies. Go ahead, Mark.
Hi, good morning. I'd like to just get a few points. First one on the reserves, just interested on the reserves slide, because you revise down reserves, but then essentially they get revised back up by the infill drilling. Should we assume therefore that the $103 million is what you'd produce without any drilling?
That's the first question. Second is, could you remind us on the remaining tax arbitration situations and timing? And those are my two questions. Thank you.
Cool. Thanks, Mark. In terms of reserves, look, we've seen a reserve reduction in 2024 because essentially we are cutting water earlier than anticipated, which indicates that the sweep of water from injector to producer is not as efficient as we initially thought. That will leave pockets of bypassed oil. That oil won't be able to be recovered from the existing well stock, and we will need additional wells to access that oil. That is exactly what the 4D campaign is essentially targeting.
It will give us a much clearer indication of how both water and oil has moved through the reservoir, but also identify those pockets of oil that we can target with new wells and mature those opportunities from 2C to 2P. We will look to recover as much of that oil as we can through those incremental campaigns. In terms of the tax arbitrations, we are focused on trying to resolve those on an amicable basis with the government of Ghana. Obviously, there is a new government in country. We are having very constructive conversations with them. We would like to resolve those outside of the formal processes. The formal processes will commence, the arbitration hearings are in July and November of this year for each of the cases. We are very much focused on working with the government to get them resolved ahead of that.
Thank you very much.
Could I ask just one more point? Could you remind me when is the production license expiry on Jubilee field?
There are two licenses in Ghana. One is 2034 and one is 2036.
Thank you very much. I'll turn it over.