A Review of the Nigerian Energy Industry

Tullow sees net profit fall

Tullow Oil Plc review31 July 2013 – UK independent Tullow Oil saw profits drop 45% during the first half of the year despite a rise in revenue and production, however gross profit was up.

The company posted an after tax profit of $313 million for the first half of the year, compared to the $567 million profit booked during the first half of 2012 when the company benefited from a $702 million gain from the farm-down of its Uganda assets.

Gross profit for the period was actually up 13% at $764 million, compared to $679 million a year earlier.

Helping boost that figure was a 15% jump in revenue over the six month period, from just under $1.2 billion in the first half of 2012, to more than $1.3 billion this year.

Lifting revenue was a 16% rise in output, with the company producing an average of 88,600 barrels of oil equivalent per day as output from the Jubilee field off Ghana continued to increase.

The rise in output helped offset a 5% drop in the average realised oil price, to $105.5 per barrel, while a 14% rise in the average realised gas price to 66.6 pence ($1.01) per therm also helped.

“Our business has a very firm financial foundation with strong production and revenue growth and significant annual operating cash flow,” Tullow chief executive Aidan Heavey said.

“I am very confident we are well placed for future growth and value creation.”

Capital expenditure on exploration and appraisal during the first half of the year totalled $512 million which included 13 exploration wells and 14 appraisal wells with an overall 63% success ratio.

Exploration costs written off during the first half of the year were lower than in 2012, totalling $176 million, compared to $451 million in the first half of 2012.

The 2013 write-offs included thee Priodontes-1 well in French Guiana, the Sapele-1 well in Ghana, the Carlsberg-1 well in Norway, the Calao-1 well in the Ivory Coast and costs associated with ongoing new ventures activity and licence relinquishments.

Despite the rise in output during the first half of the year, Tullow revised its production forecast for 2013 from 86,000 – 92,000 boepd, to 84,000 – 88,000 boepd.

Tullow noted that its board would propose to maintain an interim dividend of 4 pence per share which will be paid on 3 October.

As of 30 June, the company had a net debt of $1.7 billion, with total net assets of $5.5 billion.
*Josh Lewis, Upstreamonline

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