Tullow has announced the signature of a Memorandum of Understanding (MoU) for the extension of the licences covering its Jubilee and TEN fields in Ghana to 2040 on unchanged fiscal terms. These licence extensions unlock the potential for up to an additional 20 wells in the Jubilee field resulting in a potentially material increase in proven and probable reserves and an increase in gas sales on more secure terms. After allowing for the required additional investment, of up to US$2bn, we raise our estimate for net asset value (NAV) to 64p (from 61p), based on our flat US$75/bbl oil price deck, over four times the current share price. Moreover, the MoU demonstrates the constructive relationship the JV has with the Ghanaian government as well as providing a longer runway for production to support the holistic refinancing which Tullow is pursuing.
