Tullow expects record high first half revenue

04 July 2012, Sweetcrude, LONDON – AFRICA-FOCUSED British firm, Tullow Oil Plc, says it expects revenues for the first half of the year to hit a record high of $1.15 billion, resulting from increased production.

The company’s production for the first half of the year averaged 77,400 barrels of oil equivalent per day, up from and average of 75,350 boepd during the first half of 2011.

Tullow, which discovered Kenya’s first oil earlier this year, already produces oil in Ghana and is set to commence production in Uganda.

The company said realised commodity prices during the first half of 2012 were on par with the previous year, with the realised oil price averaging about $114.20 per barrel pre hedge, or $110.6 billion post hedge, while the realised UK gas price was about 58.4 pence per therm.

The company expects total exploration write-offs and asset value reductions for the first half of the year to total about $440 million.

That figure includes about $80 million related to write-offs associated with unsuccessful exploration activities in Sierra Leone, the Ivory Coast and Tanzania, as well as new ventures activity and licence relinquishments.

A review of Tullow’s exploration asset values also resulted in an additional write-down of about $360 million.

Tullow also said it expected the $2.9 billion farm-down of its acreage in Uganda to Total and China National Offshore Oil Corporation earlier this year to generate a post-tax profit of $558 million in relation to the deal.

Capital expenditure for the year up to 30 June amounted to about $900 million and the company forecasts full year capital expenditure to total $2 billion, based on current estimates and work programmes, with 60% of the investment to be allocated to exploration and appraisal activities.

Tullow has continued to address the decline in productivity of some of the wells at its Jubilee field, off Ghana, during the first half of the year.

Gross output at the field averaged 63,100 barrels of oil per day during the first six months of the year, but Tullow added output had reduced to about 63,000 bpd currently with a number of wells temporarily offline for ongoing acid stimulation activity.

However, it expects output to ramp up in the second half of the year however as a result of its acidisation programme and as new Phase 1A wells are brought onstream during the fourth quarter.

As a result it has forecast full year production to average between 70,000 and 80,000 bpd as output is expected to ramp up to an average of 90,000 bpd by the end of the year as it looks to hit plateau production of 120,000 bpd in 2013.

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