Tullow expects profit to rocket

TULLOW Oil is expecting its most lucrative asset, the Jubilee field in Ghana, to further boost its overall profitability this year following its partial contribution to a more than four-fold increase in pre-tax profits last year.

The Irish-founded exploration company yesterday reported a pre-tax profit of $152 million (€109.3m) for 2010 — up from the $33m in 2009.

The increase was driven by a number of factors — including first oil production from Jubilee (commercialisation of that asset will have a bigger impact on Tullow’s 2011 balance sheet, with revenue expected to double), better than expected production from non-core geographical areas, like Britain and a rise in world oil and gas prices, driven by ongoing unrest in the Middle East.

Tullow’s full-year revenues rose by 19% to $1.09bn, operating profit was up by 56% to $235m and earnings per share rose by 90% to 6.1c.

Total 2010 production amounted to 58,100 barrels of oil equivalent per day (boepd), with the company hopeful of that being increased to nearly 90,000 BOEPD this year.

Tullow also said it will be drilling in Ghana, Uganda, Sierra Leone, Liberia and French Guiana in South America this year, after closing licences in a number of territories including Gabon, Portugal, Angola and the Congo. The company’s additional flotations in Ghana and Uganda are still on course to materialise in the first half of this year.

Tullow’s chief executive Aidan Heavey dismissed some analyst feeling that its farm-down partners for the assets it acquired from Heritage Oil in Uganda might pull out of the deal, given the time it has taken to gain formal final approval for the takeover, from the Ugandan Government.

He said the deal with the country’s new Government should be completed in the coming weeks and both partners — China’s CNOOC and France’s Total — are still very much on board.

Mr Heavey added Tullow’s new drills, planned for 2011, have the potential to add material resources to the group and the business is “well positioned to deliver further growth in shareholder value over the coming years.”