Tullow buoyed by higher oil, gas prices in first half

Tullow Oil traded at record levels over the first half of the year, boosted by a combination of production growth and higher prices for oil and gas.

The company said yesterday that its production rose to 57,350 barrels of oil equivalent per day over the first six months, more than double the levels achieved in the same period of 2004.

Tullow expects to produce an average of 60,000 barrels per day over the second half as production continues to grow.

The firm successfully drilled about 30 development and appraisal wells over the first half and will pursue these over the coming months.

Conditions have also been buoyant on the gas side of Tullow's business, with production reaching an all-time high of more than 150 million cubic feet per day since the firm's Home & Wren project went into full operation in June.

"Every single asset is doing very well," said Tullow chief executive Aidan Heavey yesterday. He pointed to a "very encouraging" outlook for the remainder of the year.

Mr Heavey acknowledged that the benefit drawn by Tullow from high energy prices over the first half had been limited by its hedging policies, but he pointed out that most energy companies have been in the same position. Furthermore, he said, most of Tullow's gas is now unhedged, as is a "big chunk" of its oil.

Oil prices caused alarm in the market last week when they rose above $60 (€49.6) per barrel, but Mr Heavy believes prices could climb to $75 per barrel.

The firm is looking to raise its oil production presence in Africa, and has highlighted "material prospects" in Mauritania and Uganda.

It is currently finalising a $850 million loan facility to help fund expansion.

Shares in Tullow closed at 189p in London last night, down 2p on the day. NCB has a price target of 220p on the stock.