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Tullow Oil (LSE:TLW) is off to a good start in 2012, a position which has been accentuated by the strong financial position held in 2011, combined with new discoveries and partnerships.
The Group is expecting their sales revenue to approach US$2.3 billion, more than twice its 2010 performance backed by “increased production and strong commodity prices combined with industry-leading exploration success”, said Tullow Oil Chief Executive Aidan Heavey.
Production
The significant increase in revenue was precipitated by higher sales volume in 2011, as well as the increase in the price of oil. Tullow posted an average of 1% premium for its oil production sold to Brent.
Total production of Tullow for 2011 averaged at 78,000 barrels of oil per day (“bopd”), with a realised price at US$112 per barrel pre-hedge and US$108 post-hedge. In the UK market, the realised gas price was at 57 pence per therm (“p/therm”) pre and post hedge.
The significant increase in oil production can be attributed to the Jubilee Field in Ghana, which averaged 66,000 bopd in 2011.
Developments in Operations
Several exploration and appraisal activities were started in 2011 across Tullow’s global network of operations:
Africa Operations
The Jubilee field in offshore Ghana was considered to be one of the most productive areas of extracting oil, producing 88,000 bopd at the height of its’ operations. As a result of the success in the region, eight more wells are to be drilled in February. Tullow Oil also bought a floating production storage and offloading (FPSO) ship Kwame Nkrumah to help expand the current productional process.
Exploration campaigns are also taking place in Liberia and Sierra Leone in the hope to extend the usage of the Jubilee Field around the West African coast, whilst new wells are also being drilled in Ivory Coast, Mauritania, Equatorial Guinea, Gabon, and Congo.
Tullow raised US$72.3 million with a secondary listing on the Ghana Stock Exchange, issuing 3,531,436 ordinary shares in July 2011.
In Uganda, Tullow Oil signed a Memorandum of Agreement with the National Government over issues such as taxation, licencing, and contracts. Sale Purchase Agreements were signed with China National Offshore Oil Corporation (CNOOC) and Total in March 2011. In a separate statement today, Tullow will complete the sale of of two-thirds of its stake to the two companies.
Further explorations are expected to progress in Kenya, Ethipia, Madagasgar, and Tanzania, following 2D and 3D seismic campaigns and Full Tensor Gradiometry (“FTG”) Gravity Surveys. A new 25-year production agreement was signed with Namibia for offshore development and onshore power station.
Europe, South America, Asia Operations
In the UK, a new well was spudded in November, whilst in the Netherlands, newly acquired interests and wells are to be drilled until 2013.
An significant oil discovery was made, linking the well to the Jubilee across the Atlantic to Africa in the region of French Guiana. Another development on the continent was providing a rig for drilling in Guyana back in December.
Lastly, in both Bangladesh and Pakistan, production is expected to be at retained levels, whilst 2D and 3D seismic campaigns are expected to be continued, in line with drilling programmes for 2013 – 2014.
Partnership with Shell
Royal Dutch Shellreleased a separate statement in conjunction with Tullow’s pronouncement of a joint venture to try and discover for oil and gas areas on selective bases near the Atlantic Ocean.
CEO Comments
Mr. Heavey commented:
“We have an exciting exploration programme to open new basins, both onshore and offshore, and we hope to extend our reach in Africa and elsewhere along the Atlantic Margins with major new partnerships. There is much to look forward to in the year ahead.”
Company Spotlight
Tullow Oil is an independent oil & gas exploration and production company holding more than 90 licences in 22 countries in Africa, Europe, South America, and Asia.
References
↑ Company History
↑ New Oil Discovery
↑ Tullow Oil Company Overview
