Tullow forecasts €115m fall in revenue

TULLOW Oil has reiterated that its first-half revenues this year will be down by nearly £100 million (€115.6m) at around £290m (€335m), due to falling sales volumes and a fall in commodity prices.

In a pre-close trading update — ahead of the publication of first-half figures at the end of August — the Dublin and London-based exploration company also said that total production levels for the year are likely to be broadly flat at around 58,000 barrels of oil equivalent per day.

Tullow’s chief executive, Aidan Heavey, said that the current year is progressing in line with expectations and the company was operationally on target.

Last year, Tullow generated record pre-tax profits of €322.4m, despite only 7% of its global assets at production level.

With its two main assets — in Ghana and Uganda — due to begin commercially producing as of next year, the company’s outlook is upbeat.

“In the first half of this year, we focused on the exploration, appraisal and development of the group’s two major growth projects in Ghana and Uganda.

“This has resulted in significant resource additions in Uganda and the discovery of the potentially transformational Tweneboa field in Ghana.

“It promises to be an exciting second half of the year with high-impact exploration and appraisal wells in Ghana and Cote d’Ivoire. The outlook for Tullow remains very positive,” Mr Heavey said.

With regard to the seemingly constant speculation regarding Tullow as a potential takeover target for any number of international exploration players, Mr Heavey stated: “It’s almost a daily occurrence and it probably always will be, given that we have two of the hottest properties in the industry in our portfolio — and that’s unusual for a company of our size.”

On the prospect of Tullow being the buyer of any company, he added: “We’re always looking at possibilities. In a business like ours, you can’t just rely on exploration growth alone; acquisitions do play a part. We’re not planning or looking at anything at the moment, but we’d never rule it out, if the right opportunity presented itself.”

Capital expenditure is likely to amount to £700m for the full year (£425m for the first half), with 85% understandably being spent in Africa and the remaining 15% on Tullow’s North Sea assets.

Around 65% of investment will go on production and development activities, with the remainder going on exploration and appraisal.

Tullow’s share price in Dublin yesterday fell by just under 3% (31c) to €10.14.