Despite news of a new oil formation discovered in Mauritania, the share price of Tullow Oil (TLW) drifted lower after it revealed a steep decline in full-year earnings. Tullow’s market value has fallen by nearly a third over the past 12 months due to a succession of exploration setbacks. Yet the prevailing negative sentiment needs to be set against the potential for a new oil play in East Africa, coupled with Tullow’s solid track record in project development.
In reality, Tullow recorded solid revenue and cash-flow growth, due to increased production from its flagship Jubilee field in Ghana. Despite a number of unplanned maintenance shutdowns through the second half, Tullow recorded a 6 per cent increase in overall net production to 84,200 barrels of oil equivalent per day (boepd).
This increase allowed Tullow to record an equivalent rise in gross profit to $1.4bn (£873m), but bottom-line comparisons suffered due to an additional $200m in exploration write-downs, together with a $703m one-off profit booked in 2012 from a partial sale of Tullow’s Ugandan assets to Total SA and CNOOC.
TULLOW OIL (TLW) | ||||
---|---|---|---|---|
ORD PRICE: | 851p | MARKET VALUE: | £7.7bn | |
TOUCH: | 850-852p | 12-MONTH HIGH: | 1,270p | LOW: 776p |
DIVIDEND YIELD: | 1.4% | PE RATIO: | 115 | |
NET ASSET VALUE: | 585¢* | NET DEBT: | 33% |
Year to 31 Dec | Turnover ($bn) | Pre-tax profit ($bn) | Earnings per share (¢) | Dividend per share (p) |
---|---|---|---|---|
2009 | 0.9 | 0.3 | 3.2 | 6.0 |
2010 | 1.1 | 0.2 | 8.1 | 6.0 |
2011 | 2.3 | 1.1 | 72.5 | 12.0 |
2012 | 2.3 | 1.1 | 68.8 | 12.0 |
2013 | 2.6 | 0.3 | 18.6 | 12.0 |
% change | +13 | -72 | -73 | - |
Ex-div:02 Apr Payment:09 May £1=$1.65 *Includes intangible assets of $4.5bn, or 494¢ a share |