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Jan. 27, 2021, 2:45 a.m. EST

Tullow Oil warns of lower output in 2021

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By Jaime Llinares Taboada

Tullow Oil PLC said Wednesday that it expects a 2020 gross profit of around $400 million as its oil production was in line with guidance but warned of lower output in 2021.

The London-listed energy company said that 2020 revenue is expected to be around $1.4 billion, as production averaged 74,900 barrels of oil per day with a realized price of $50.8 per barrel.

For 2021, Tullow forecast that its production will fall to 60,000-66,000 barrels a day due to the 2020 drilling hiatus, a planned shut-down on Jubilee, and deferred development drilling on Simba, Gabon.

The company expects to achieve an underlying operating cash flow of around $500 million, and projected capital expenditure of $265 million and decommissioning costs of $100 million.

"We will leverage the new plan and our reduced cost base to generate positive free cash flow at current commodity prices, drive down our net debt and deliver a robust balance sheet," Chief Executive Rahul Dhir said.

At the end of 2020, net debt was cut to $2.4 billion from $2.8 billion as a result of $430 million of free cashflow.

Write to Jaime Llinares Taboada at jaime.llinares@wsj.com; @JaimeLlinaresT

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