Tullow shares up 5pc over Kenya drilling plan
Published 14/02/2013 | 04:00
TULLOW Oil tossed shareholders a rare piece of good news when it announced an ambitious exploration and drilling programme in Kenya which could eventually see the company repeating its success in Uganda by extracting oil in a country not known for its oil reserves.
The news surprised the markets and shares advanced as much as 5pc to erase some of the recent declines which have turned the shares into the worst-performing oil stock in the UK's benchmark oil and gas index.
Tullow reiterated yesterday that it intends to stay focused on exploration rather than developing existing discoveries.
"We are an exploration-led company, there's no value in chasing production targets," said chief executive Aidan Heavey.
Tullow is selling fields in the UK, Netherlands, Pakistan and Bangladesh, and will consider more disposals including Ghana where the company has massive operations.
The sale of these fields will help finance the drilling of more than 40 exploration and appraisal wells in Kenya, Mauritania, Norway and French Guiana.
Tullow's explosive growth – its market value tripled between 2008 and 2011– has stalled.
Before yesterday, the shares had dropped 23pc in the last 12 months, the worst performance in the FTSE 350 Oil & Gas Index, on concern the company's biggest field, Jubilee in Ghana, wasn't "performing as well as expected".
Tullow expects to drill up to 11 wells in Kenya this year.
Davy stockbrokers analyst Caren Crowley said "we believe Tullow has the financial strength and assets to provide for key developments in Ghana and Uganda and to continue to spend $1bn annually on exploration".