Tullow to finalise $2.9bn sale of Ugandan licences next month

EXPLORATION AND production group Tullow Oil expects to complete a $2.9 billion sale of two-thirds of its interest in a series of licences in Uganda next month.

The Irish company yesterday said that production from its Ghanaian interests and high oil prices helped drive sales to a record $1 billion in the first half of this year.

The figure was more than twice the $486 million recorded during the same period in 2010, while pretax profits more than trebled to $540 million from $131 million.

The increases in sales and profits were largely attributable to oil production from the Jubilee field off the coast of Ghana, which came on stream last year.

Tullow produced 75,100 barrels of oil a day from all its interests in the first half, almost 20,000 more than during the same period last year.

The company commanded an average price of $112 a barrel for its oil during the six-month period, compared with $77 in the first half of last year, while it was able to charge 56p sterling a unit for natural gas, against 34p in 2010.

Tullow is close to completing the agreed sale of two-thirds of its interests in the Lake Albert Rift Basin in Uganda to development partners French multinational Total and Chinese State operator CNOOC for $2.9 billion.

The company said yesterday that it expected the sale, which has been subject to a series of delays since last year, to be finalised next month.

The deal is subject to Ugandan government approval, which requires the backing of various agencies.

Tullow’s statement said that they have dealt with almost all outstanding issues.

Once the sale goes through it will leave Tullow with no debt.

Production is scheduled to begin in 2015, and the rift basin is expected to produce 200,000 barrels of oil a day.

Oil production is set to average at between 82,000 and 84,000 barrels a day this year, and reach 100,000 by the year’s end.

A delay in bringing the Jubilee field to peak production means that average production will be about 7,000 barrels a day lower than originally expected.

Prices are also expected to be lower through the second half of the year.

However, chief executive Aidan Heavey said yesterday that the company still expected the second half of this year to surpass the first as production was continuing to increase.

Tullow with partners Anadarko and Kosmos Oil are expected to begin the development of the Enyenra-Tweneboa deepwater fields off Ghana’s coast this year.

Production there is also set to begin in 2015. Chief operating officer Paul McDade yesterday estimated the total cost of the development at $4 billion, a sum that will be shared by the partners.

Enyenra is of a similar scale to Jubilee, meaning it has the potential to produce up to 120,000 barrels a day.

The group is continuing with exploration activity on key assets in Liberia, Kenya and French Guyana, as well as further work in Uganda and Ghana.

Tullow is proposing to double its interim dividend payment to shareholders to 4p sterling from 2p sterling last year.

The company’s earnings per share were 35 cent, more than three times 9.4 cent it reported during the first half of last year.

Shares in Tullow rose by 79.5p to close at 1026p sterling in London yesterday.