Tullow Oil tempted by new prospects off Norwegian coast
TULLOW Oil has expanded its presence in the North Sea with the acquisition of interests in eight new licences.
The eight licences, four of which Irish-founded Tullow is the designated operator for, are located off the coast of Norway.
Tullow has previously said it wants to reduce its foothold in mature assets in the North Sea, particularly those in UK waters. It wants to shed older, cash-generating assets to chase potentially higher returns from oil discoveries in frontier areas.
However, its latest move shows the company has not completely given up on the region.
"Tullow's appetite for Norwegian acreage, based on the number of licences pursued, would appear undiminished," said Goodbody stockbrokers' Gerry Hennigan.
Offshore Norway is still an attractive prospect for Tullow, he said, because the exploration blocs on offer are larger than those offered in the UK with more potential for large finds.
The fiscal terms set out by the Norwegian government are also more attractive for exploration companies. The government underwrites significant portion of costs in the event that exploration is not profitable.
A total of 65 offshore licences were up for grabs. There was high interest from oil firms, despite a recent oil tax hike by the Norwegian government and increased industry costs.
Other successful bidders included Premier Oil, which gained an interest in two licences, both of which it will operate.
Norwegian authorities hope the interest will prolong production, after the world's seventh-biggest crude oil exporter saw its oil output fall to a 25-year low in 2013. The licensing rounds were the first after the previous centre-left government, which left power in October, introduced an oil tax hike opposed by oil and gas firms.
Tullow's share price was up 2pc to £9.03 (€11.02) by early afternoon yesterday. Shares in the company lost nearly half their value between January 2012 and December 2013, but have added 5pc in January amid rumours of a potential takeover move from Statoil.