Higher fuel prices boost Tullow results
Results were ahead of market expectations and shares in Dublin rose 4 cents to €5.09.
Prospects for the group in Uganda and across its African operations generally look very promising.
Chief executive Aidan Heavey confirmed the group will drill four more additional wells in Uganda this year than was previously anticipated.
"The oil is there. It is a question of how much."
Two oil rigs are being brought in to carry out the drilling.
The two existing wells have indicated promising reserves, but still have to be proved up.
This year Tullow will drill between 15 and 20 wells in search of oil and gas. At this stage its revenues are split 50/50 between the two fuels.
Analysts said the share price, which has risen in recent times, will probably mark time until finds in Uganda and other prospects are confirmed.
Chairman Pat Plunkett said in his statement with the results: "Tullow believes there is an opportunity over the coming years for the group to continue to build a truly pan-African oil and gas business. During 2005 we invested over £139 million (€200.7m) in our African businesses with exceptional results."
NCB's London-based oil analyst Peter Hutton reckons the company would not have steered the market in such definite terms unless it was optimistic about Africa.
While the shares are probably fully valued the outlook probably represents a good buying opportunity, he said.
Citicorp were more circumspect and still see an element of risk in the stock.
Last year Tullow generated operating profits of £198.6m (€286.8m), an increase of 250%.
Sales nearly doubled from £225m (€325m) to £445m (€657m) in the year to December 31, 2005.
Shareholders are to benefit from a higher final dividend, increased by 140% to 3p (4c) against a market expectation of 2.30p (3.3c).
Basic earnings per share at 17.50p (25.2c) were up by 198% and in line with expectations.
The group also carried out major refinancing of its balance sheet and has over £400m (€576.6m) in approved lending to call on at this stage, apart from its good cash flows, to fund its future requirements.
Tullow bought assets in the past when oil and gas prices were low and as prices continue to rise it has put greater emphasis on exploration.
That trend will continue, said Mr Heavey, who ruled out any further acquisitions in the current year.
Oil and gas prices will stay high and oil prices will range between $60 and $75 per barrel (€49.86-€62.32) well into the future, he warned.
