Tullow Oil (TLW) enjoyed mixed fortunes on the exploration front through the first six months of 2013, but the opening of a new oil province in east Africa augers well for the Irish driller's growth prospects.
Headline earnings fell sharply, but strip out the net effects of exploration write-offs, and $702m (£455m) of gains linked to a Ugandan farm-down which boosted earnings in the first half of 2012, and Tullow's underlying operating profit increased by 16 per cent to $676m. Full-year results will benefit from the receipt of $343m that Heritage Oil (HOIL) has been ordered to pay to Tullow in relation to the settlement of a tax dispute in Uganda.
Production was up by 14 per cent to 88,600 barrels of oil per day (bopd), which was in line with market expectations. However, full-year output is likely to average 84,000 to 88,000 bopd as opposed to previous guidance of 86,000 to 92,000 bopd. Tullow drilled a total of 27 exploration/appraisal wells, with an overall success rate of 63 per cent. Encouragingly, the commercial viability of its latest drilling success at the Etuko-1 well in Kenya means the in-situ resource estimate has increased by 20 per cent to 300m barrels. Tullow also intends to seek a "development carry" from any future partner on its Ten project in Ghana, where cost estimates have risen by around 9 per cent to $4.9bn.
Goodbody expects 2013 EPS of 88.8¢ (from 142¢ in 2012).
| TULLOW OIL (TLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,030p | MARKET VALUE: | £9.4bn | |
| TOUCH: | 1,031-1,032p | 12-MONTH HIGH: | 1,485p | LOW: 931p |
| DIVIDEND YIELD: | 1.2% | PE RATIO: | 39 | |
| NET ASSET VALUE: | 595¢* | NET DEBT: | 31% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 1.17 | 829 | 60.3 | 4.0 |
| 2013 | 1.35 | 486 | 32.2 | 4.0 |
| % change | +15 | -41 | -47 | - |
Ex-div: 28 Aug Payment: 3 Oct £1 = $1.53 *Includes intangible assets of $4.22bn, or 465¢ a share | ||||
