Oil firm tells of major potential

Kenya, Uganda, and Ethiopia hold “enormous” potential for Tullow Oil in the coming years, the Irish-founded exploration firm’s chief executive Aidan Heavey has said.

The London-headquartered company’s initial drilling activity in Kenya has indicated over 300m barrels of oil, leading management to suggest the country — where Tullow has a land base larger than the North Sea — is looking even better than Uganda.

Early estimates suggest gross oil production from the assets in which Tullow holds shares in Kenya and Uganda could top 500,000 barrels a day by 2018.

Tullow’s first-half figures, published yesterday, met expectations, with pre-tax profit coming in at $486m (€365m) and sales revenue rising by 15%, year-on-year, to just under $1.35bn. The profit figure was down by 41% on the $829m reported at the corresponding point last year, but that figure was inflated due to the one-off proceeds from an asset sale in Uganda during 2012.

Mr Heavey said that bids from potential development partners for Tullow’s TEN project off the coast of Ghana should be in by October. The chosen partner would cover costs in return for up to 20% of the fields.

Tullow also remains “on track”, he added, to finalising the sale of its remaining non-core gas assets in Pakistan and the North Sea by the end of the year. Similar assets in Bangladesh were sold earlier this year and bids for the remaining assets are being evaluated.

The first half of the year saw Tullow drill 13 exploration wells and 14 appraisal wells. The second half is likely to see another 20 exploration wells drilled.

First-half production levels amounted to 88,600 barrels of oil equivalent per day. Full-year production is likely to come in slightly below expectations.

Tullow also said yesterday that early seismic work suggests its interest in Greenland could have 1bn barrel oil potential, although it is unclear how quickly progress will be made.