Tullow to know Kenyan assets soon

TULLOW Oil chief executive Aidan Heavey has said that the company should know the full potential of its early stage assets in Kenya — tipped to be its next big market — within 12 months.

Addressing the company’s annual Irish shareholders’ meeting in Dublin yesterday, Mr Heavey said Tullow’s operations in Kenya and Ethiopia “should replicate” the success already seen in Uganda.

However, while the asset area is roughly ten times the size of Tullow’s Ugandan assets, it is unclear whether they are of similar quality. Mr Heavey said that Kenya, along with South America, are potentially big future asset areas for Tullow.

Earlier this week Tullow took a 10% stake of a block off the Kenyan coast, through a farm-in agreement with Australian exploration firm PanContinental.

Following recent acquisitions in Holland and Ghana, Mr Heavey said the company will remain active, with a “continuous stream of small deals expected”. However, none of those will relate to any of the new licences up for grabs off the coast of Ireland.

“We’re not saying there’s no upside to offshore Ireland, but we focus on a particular type of geology which isn’t found in Irish waters. If we were to suddenly look at Ireland, we’d be getting into areas we don’t know. We’re happy with all of the assets currently in our portfolio and we’ll continue to expand to areas where we know the geology,” he said.

In response to a question from a shareholder, Mr Heavey said Tullow is not in any immediate danger of being bought out by one of the industry’s heavyweights.

“That question has been asked for a number of years. The reality is that we’re quite sizeable now and there are probably not a lot of companies around that could mount a takeover bid for us. We don’t want to be taken over. We believe there’s a need for a big independent exploration company out there, and I think the wider industry shares that view. Ultimately, companies tend to be taken over when they want to be and it’s very difficult to take over companies that don’t want to be.”

Tullow also said it remains confident of a positive outcome to its London High Court case aimed at recovering tax payment reimbursements from Heritage Oil — arising from its change of ownership deal in Uganda — and being able to complete its farm out of those assets, as agreed, in the coming months.

Tullow will also begin the search for a new chairman before the end of the year, with Pat Plunkett stepping down. Tullow is also likely to follow up its stock listing in Ghana by listing in Uganda within the coming 12 months, with an ultimate aim of taking a listing in every territory in which it has a presence.