Tullow shares hit six-month low despite record performance
TULLOW Oil posted record revenue and profits during the first half of the year, but shares in the company fell to their lowest level since December as it barely missed forecasts on production at a group of licences in Ghana.
The Irish firm, which is the biggest player in the African market, said it recorded pre-tax profits of $829m (€684m) during the six months to the end of June.
That was an increase of 48pc on the same period a year earlier, while revenue surged 10pc to $1.16bn. But that wasn't enough for the markets, where Tullow was a target of heavy selling throughout the day. By the close of trading the company's stock was off 6.7pc at €16.33 -- the lowest closing price since January 30. The share is up 1pc so far this year.
Analysts at Morgan Stanley indicated the fact that Tullow's expected production rate for the wells at three projects off Ghana -- collectively known as TEN -- was marginally below forecasts may hit the share price. Tullow said the projects may contain 360 million barrels of oil per day (BOPD).
Chief executive Aidan Heavey remained upbeat. "We're very happy with the projections for TEN," he told the Irish Independent. We've flagged most of the data in these results previously so we may not have blown away the market, but we are on track with what we're doing."
He also confirmed the company had resolved problems with its flagship Jubilee Field off the west coast of the continent.
Job Langbroek of Davy Stockbrokers said: "Tullow continues to produce evidence that the premium over the core asset base in the group being paid by the market is justified."