Tullow farm-out targets this year

Tullow Oil has said there is a good chance it may complete the planned farm-out of part of its stake in the highly-rated Ten oil project in Africa this year, although it reiterated that it is in “no rush” to do so.

The Irish-founded exploration company currently holds a 47.5% interest in the Tweneboa Enyenra Ntomme project, which is valued at an estimated $5bn and located off the coast of Ghana. Tullow is open to decreasing its holding to as low as 30% (although it may not drop that low) if an exceptional offer is received, but is in no immediate rush to do so, given that first oil from Ten is not anticipated until the summer of 2016.

However, speaking yesterday, Tullow’s CEO, Aidan Heavey said that while value is only likely to increase, a farm-out deal could be done this year given the number of different bids already received — all of which are currently being examined by Tullow. All proceeds from the stake sale — some estimates suggesting that could be as high as $600m — will go into funding Ten’s ongoing development, with Tullow remaining as project operator.

The company’s 2013 annual results published yesterday reiterated its pre-close trading update of last month; confirming annual revenue growth of 13% to $2.65bn and 7% gross profit growth to $1.44bn. However, operating profit fell 68% to $381m and pre-tax profits dropped 70% to $313m.

Tullow also said that results from one of its offshore exploration wells in Mauritania could open a new oil play in the region.

The company’s management has also said it “may look to modify” its holdings in Uganda, via a farm-out of some of its assets, in the future, as an increasing amount of its focus is taken up with operations in Kenya.

Tullow is also hopeful of making further progress on the sale of its non-core gas assets.