Tullow clinches oil deal in Africa
TULLOW Oil could be generating up to $160,000 in cash per day from its oil and gas interests off Africa's Ivory Coast within the next three years, writes Vincent Wall.
Yesterday the company announced that the government of the Ivory Coast had granted approval for a production sharing contract for the Espoir Field, in which Tullow has a 24pc equity stake.
Other shareholders include Ranger Oil, Addax Petroleum and Petrocim the state oil company of the Ivory Coast.
According to Tullow chief executive, Aidan Heavey, work on the field has already begun and first production is planned for the year 2000.
The field, which lies two miles off the coast in 200m of water has estimated reserves of 75m barrels of oil and 237 billion cubic feet of gas.
``Within three years it is estimated that the field will be producing about 32,000 barrels of oil equivalent per day, and we will control nearly a quarter of that production.
``At current prices of up to $20 per barrel that amounts to a cash flow of $160,000 per day for us,'' Mr Heavey said yesterday.
The field will cost about $300m to bring into production, 80pc of which will be covered by a project finance debt package now under negotiation.
Tullow's share of the 20pc equity funding required will amount to about $15m, which it will easily fund from its existing cash flow and reserves.
Publishing its half year financial accounts yesterday, Tullow also confirmed that it had made applications for a new round of exploration blocks in Bangladesh, which closed in September.
``Negotiations with the government of Bangladesh have now been concluded on one of the blocks and it is anticipated that the licence awards will be announced before the end of the year,'' Mr Heavey added.
In the six months to the end of June, pretax profits rose by 23pc to £1.49m, while turnover was higher by a more modest 2.4pc at £2.95m. Profits were boosted by net interest income of nearly £480,000.
``The company's finances remain strong following the fund raising last year and the recent sale of our Czech interests, and we have up to £20m in cash resources at the moment,'' he said.