With its Jubilee field in Ghana still on track to produce first oil in November or December this year, Tullow Oil is on the verge of transforming its oil production. Jubilee is expected to ramp up production to an eventual rate of 120,000 barrels of oil equivalent per day (boepd) within three to six months, which will contribute around 95,000 boepd over 2011. That will add to some 57,000-58,000 boepd from existing background assets that the group is pushing to maintain as its bedrock.
The full-year capital expenditure budget remains at $1.5bn (£1bn), 90 per cent of which will be spent in Africa, mostly Ghana and Uganda. Tullow's acquisition of Ugandan assets from Heritage Oil (that it will sell into an equal-share partnership with CNOOC and Total) remains delayed by the tax dispute between Heritage and the Ugandan government, although Tullow continues to target first oil in 2014-15.
The pipeline of upcoming exploration prospects remains as exciting as ever, although as Tullow progresses to more frontier drilling - for example, in South America - its enviable drilling success rate (82 per cent in the first six months) will almost certainly suffer. Bank of America Merrill Lynch is forecasting full-year EPS of 14.6p (22.6¢), rising to 64.7p (100¢) in 2011 with the contribution of Jubilee (4.5p in 2009).
| TULLOW OIL (TLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,220p | MARKET VALUE: | £10.8bn | |
| TOUCH: | 1,219-1,221p | 12-MONTH HIGH: | 1,375p | LOW: 980p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 221 | |
| NET ASSET VALUE: | 434¢* | NET DEBT: | 5% | |
| Half-year to 30 Jun | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 439 | 52.5 | 4.00 | 2 |
| 2010 | 486 | 131 | 9.35 | 2 |
| % change | +11 | +153 | +134 | - |
Ex-div: 29 Sep Payment: 4 Nov *Includes intangible assets of $2.29bn, or 258¢ a share £1=$1.545 | ||||
