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Tullow Oil expected to announce record first-half sales and profits

TULLOW Oil, the largest company listed on the Dublin stock exchange, said it expected to post record sales and profits for the first half of 2011 as it ramps up output in Ghana. Its shares rose as a result.

Higher oil prices combined with the production of 80,000 barrels of oil per day from its Jubilee oil field in Ghana will help lift first-half revenues to record levels of $1.05bn (€726m), the exploration company said.

However, Tullow pushed back its target for reaching production of 120,000 barrels of oil equivalent per day from the Jubilee field to August, a month later than guidance it gave in May, owing to rig maintenance.

"The reservoir itself is performing as expected. We expect to get to 120,000 barrels of oil equivalent per day in late August," chief operating officer Paul McDade said yesterday.

Shares in Tullow closed up 53.8 points, or 3.9pc, at €14.49 in Dublin yesterday. That helped pare recent losses as investors fretted about delays connected with a deal that is due to pay out $2.9bn to Tullow.

Tullow said yesterday it was close to finalising the deal in Uganda with France's Total and China's CNOOC which would see the two new partners pay Tullow $2.9bn as part of a project to turn the East African country into an oil producer.

"We expect to receive that soon. It's just really a question of finalising various documents but we do expect it to be in the next few weeks," chief financial officer Ian Springett said.


Total production from Ghana and Tullow's assets in countries including Equatorial Guinea and the UK averaged 75,350 barrels of oil equivalent per day in the first six months.

The company also said it expected full-year production to come in between 90,000 and 94,000 barrels of oil equivalent per day, above the 86,000 to 92,000 level it forecast in January, boosted by acquisitions in Ghana and the Netherlands.

Oriel Securities analyst Richard Rose said he was upgrading his recommendation on Tullow to "add" from "hold" despite average production coming in behind the 80,000 barrels a day he forecast.

"The shares have underperformed over the last quarter and while they cannot be considered a value play, the depth of the exploration portfolio provides considerable upside potential," Mr Rose said, pointing to wells Tullow is drilling in French Guiana, Liberia and Kenya.

Results from Zaedyus, the name given to the closely-watched well being drilled off the coast of French Guiana where Tullow hopes to open up a new hydrocarbon basin in the Atlantic Ocean, are expected in August, said the company.

"We're making steady progress with Zaedyus. It's been a challenging well but we're getting there. So far the geology is coming in within prognosis so we drill ahead," exploration director Angus McCoss said.

Tullow added that its Russian and Japanese partners expect to agree on natural-gas sales from Namibia's Kudu field this year, allowing project development to start in 2012. (Additional reporting Reuters and Bloomberg)

Irish Independent