Tullow rises after ruling in Ghana border row
Published 28/04/2015 | 02:30
Dublin-listed oil producer Tullow Oil saw its shares trade at a five-month high yesterday after a favourable weekend ruling by an international maritime tribunal that allowed it to continue developing its TEN oil field off the coast of Ghana.
Last month the Tullow Oil share price dropped in London and Dublin after it became clear that a maritime border dispute between Ghana and Ivory Coast could delay the company's multi-billion dollar Tweneboa, Enyenra and Ntomme (TEN) oil project.
But the Hamburg-based International Tribunal for the Law of the Sea (ITLOS) ruled on Saturday the project could continue on the condition that Ghana does not start any new drilling in the area.
Tullow's shares rallied on the news after the London stock market opened yesterday, rising up to 456.9 pence, the highest level since late November and up more than 8pc on the previous session.
The tribunal is expected to give a final ruling on the case in 2017, months after the TEN oil project is expected to start production.
Tullow said it had already drilled all of the 10 wells expected to be operational when the field starts pumping oil.
"Tullow is not a party to this arbitration process and will now await a decision by the government of Ghana on how it will implement the provisional measures order," the company said in a statement.
The tribunal is expected to make a final ruling on the border dispute in late 2017.
The 10 wells which have already been drilled are enough to help Tullow start output and increase it to a target of 80,000 barrels a day by 2017, Al Stanton, a London-based analyst with RBC Capital Markets, wrote in a report yesterday.
Kosmos Energy, based in Dallas, Texas, Anadarko Petroleum, South Africa's Petro and Ghana National Petroleum are partners in the TEN project. Tullow is the operator with 47pc interest.
Ivory Coast challenged sea boundaries with neighbouring Ghana and asked the arbitration panel in Hamburg to order Ghana to halt drilling in the disputed area, including in Tullow's TEN project.
The tribunal ordered no new wells to be drilled in the area.
A ruling in Ivory Coast's favour would probably result in TEN becoming part of a joint development zone between the two countries, which may affect the fiscal regime the asset operates under, James Hosie, an analyst at Barclays, said in a note.
(Additional reporting from Bloomberg and Reuters)