Tullow Oil continues to advance its world-class developments in Ghana and Uganda and remains on course to produce first oil from the Jubilee field in Ghana later this year. That is expected to lift production from just over 58,000 barrels of oil equivalent per day (boe/d) in 2009 to close to 100,000 boe/d, and substantially above that in 2011. In Lake Albert, Uganda, which has seen a phenomenal run of exploration success, Tullow is finalising a deal with Total and CNOOC that will see the partners take equal shares in a fast-track development.
Despite near-term production growth, chief executive Aidan Heavey reiterates that Tullow remains very much an exploration business, and is looking to increase its exploration activity further. The group achieved an 87 per cent exploration success rate in 2009, although that will almost certainly be lower this year as it seeks to open up some new, higher risk exploration areas. In addition to further exploration in Africa, Tullow also plans to drill substantial wells in Guyana and French Guyana later this year.
Success with the drillbit has added to reserves and resources, which now stand at 300mboe of commercial reserves and 594mboe of contingent resources. The total resource potential of the portfolio is 2.8bn boe. Capital expenditure will remain high this year, with an estimated £990m to be spent on developing the fields at Jubilee and Lake Albert, and on high-impact exploration.
The results were significantly down on the record 2008, partly reflecting the continued investment in exploration and building production. In addition, profits were hit by lower oil prices and declining production from maturing fields, on top of which 2008 benefited from significant disposal proceeds. Prior to these results, Deutsche Bank was forecasting 2010 pre-tax profits of £129m and EPS of 8.4p.
| TULLOW OIL (TLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,265p | MARKET VALUE: | £11.2bn | |
| TOUCH: | 1,264-1,266p | 12-MONTH HIGH: | 1,375p | LOW: 714p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | NA | |
| NET ASSET VALUE: | 186p* | NET DEBT: | 47% | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2005 | 445 | 179 | 17.5 | 4.00 |
| 2006 | 579 | 263 | 24.2 | 5.50 |
| 2007 | 639 | 114 | 7.1 | 6.00 |
| 2008 | 692 | 299 | 30.9 | 6.00 |
| 2009 | 582 | 20 | 1.9 | 6.00 |
| % change | -16 | -93 | -94 | - |
Ex-div: 14 Apr Payment: 21 May *Includes intangible assets of £1.33bn, or 166p a share | ||||
