A 38 per cent increase in the realised oil price, together with an overall increase in production, allowed Africa-focused
Tullow's operating profit actually soared to $1.13bn (£720m) from $262m a year earlier. And while related cash costs ticked up 8 per cent to $13.50 a barrel, total operating cash flow surged 132 per cent to $1.83bn. Still, average total production at its Jubilee field in Ghana was hit by technical problems and reached just 66,000 barrels of oil per day (bopd) – that's roughly half the targeted 12,000 bopd field plateau rate. However, Tullow aims to hit that target sometime next year and average group production still grew 35 per cent year on year to 78,200 bopd. In the current year, Tullow plans to boost capital expenditure 21 per cent to just under $2bn, as part of a 38-well drilling campaign. Meanwhile, last month Tullow completed a long-awaited farm-down of its acreage within Uganda's Lake Albert Rift Basin to CNOOC and Total for $2.9bn.
Barclays Capital expects 2012 EPS of 88¢ (72¢ in 2011).
|TULLOW OIL (TLW)|
|ORD PRICE:||1,478p||MARKET VALUE:||£13.4bn|
|TOUCH:||1,474-1,478p||12-MONTH HIGH:||1,611p||LOW: 880p|
|DIVIDEND YIELD:||0.8%||PE RATIO:||32|
|NET ASSET VALUE:||518¢*||NET DEBT:||60%|
Tullow has continued to impress on the exploration front, with a 77 per cent appraisal success ratio. But with the shares trading on a punchy 26 times expected earnings, that good news looks factored in for now. Hold.
Last IC view: Hold, 1,366p, 23 Jan 2012