Tullow Oil may have delivered record revenue and earnings in the first half, but that was no more than the market has come to expect from the frontier oil explorer, and is why its shares continue to command a premium rating.
Africa-focused Tullow Oil - a serial over-performer with four new oil basin discoveries in five years - continues to grow its production profile while spending heavily on frontier exploration. Net oil production in the first half rose 3 per cent over the prior year period to 77,400 barrels of oil equivalent per day (boepd), as the remediation program on the company's key Jubilee field offshore Ghana gathered pace. Accordingly, the company estimates it will have a net exit rate of 90,000 boepd at the year-end.
Looking toward exploration in the second half, Tullow plans on spudding two wells onshore Kenya to follow up on the major Ngamia discovery - the key uncertainty there is whether the larger than expected pay zone at Ngamia will be penetrated again. Tullow also expects to spud the Mbawa well offshore Kenya, the Zaedyus 2 well in French Guiana, one well in Ethiopia and two more in Ghana, a relatively muted schedule in light of the company's previous drilling campaigns.
Broker Investec Securities expects EPS of 84.7¢ this year (from 72.5¢ in 2011).
TULLOW OIL (TLW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,323p | MARKET VALUE: | £12bn | |
| TOUCH: | 1,322-1,324p | 12-MONTH HIGH: | 1,611p | LOW: 880p |
| DIVIDEND YIELD: | 0.9% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 568¢* | NET DEBT: | 13% | |
| Half-year to 30 Jun | Turnover ($bn) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2011** | 1.06 | 560 | 36.9 | 4 |
| 2012 | 1.17 | 829 | 60.3 | 4 |
| % change | +10 | +48 | +63 | 0 |
Ex-div: 5 Sep Payment: 4 Oct *Includes intangible assets of $3.1bn, or 343¢ a share **Certain figures have changed from previous reports due to a retrospective restatement £1=$1.55 | ||||
