Tullow profits rise to €33.1m

TULLOW OIL made pre-tax profits of €33.1m (£22.6m) in the first half of this year, up more than 50% on the same period last year.

Turnover rose 16% to €112.2m (£76.5). The company’s North Sea gas interests accounted for nearly 70% of total sales. The rest came from the Espoir field in Cote d’Ivoire, west of Nigeria and one month’s contribution from its $570m acquisition Energy Africa.

Profits before exploration activities increased by 32% to €45.3m (£30.9m) and an interim dividend of 0.73c (0.5p) has been declared.

Chairman Pat Plunkett said the Energy Africa deal had transformed Tullow, while the immediate outlook was supported by high oil and gas prices. He said the integration of South Africa-based Energy Africa was well advanced.

So far this year, five wells have been drilled and most are expected to deliver further reserves.

Tom Hickey, head of finance at Tullow, said he expected all five wells will be commercial, adding that some will in fact go “straight to development.”

Another nine wells are due to be drilled also this year and the group is confident that they too will add to the overall oil pool that is being developed in the group.

The acquisition of Energy Africa is not obvious in the results, contributing just one month to the first-half performance.

The figures, however, were in line with market expectations and got favourable mention from analysts in Dublin.

In a full year the group is expected to double turnover and profits as result of the major deal.

Tullow Oil paid $500m for Energy Africa, funded partly by new debt and partly by the issue of 130 million new shares at 95p per share to raise £120m.

Energy Africa is a South African-based company with interests in nine African countries. It is more than half-owned by Engen, which in turn is 80% owned by Petronas.

Tullow also agreed to acquire 50% of EAGHL, a joint venture between Energy Africa and APIL, for $70m, which will be paid for by the issue of 41.5 million new shares.

The takeover will result in Energy Africa accounting for 55% of earnings and sales and the North Sea, 45%.