Tullow reports exploration success

Dublin and London-listed group Tullow Oil said today it has had an 85 per cent exploration success rate for the year-to-date.

In a trading update, the company said its business is continuing to perform strongly with its exploration programmed delivering material successes in Uganda, Ghana and Sierra Leone.

Production this year was expected to average the equivalent of 58,000 barrels of oil a day, the company said. This is in line with previous estimates.

Capital expenditure for 2009 is expected to be in the region of £750 million.

Net debt at the end of October was £664 million, according to the statement.

"Tullow has continued to build for the future in 2009 with outstanding exploration performance and excellent progress on major development projects in Africa. Recent successes in Sierra Leone and Ghana have enhanced the potential of our West African portfolio and the inclusion of Shell as a partner in French Guiana is a strong endorsement of our Equatorial Atlantic acreage," the company said.

"A number of high-impact wells will commence drilling before year-end and we expect to have a new partner in Uganda early in the New Year. The outlook for the remainder of 2009 and into 2010 is very positive," it added.

Tullow said it is aiming to sell up to 50 per cent of its interests in the Lake Albert Rift Basin in Uganda

The exploration firm said it hopes to retain a stake in the basin and to work "with a like-minded partner." It added that 'considerable interest had been shown by a number of oil companies and that a decision on a suitable partner would be made early next year.

Separately Tullow confirmed today that Royal Dutch Shell has agreed to buy up to 45 per cent of stake in the explorer's licence offshore French Guiana, boosting hopes of the area could contain large oil reserves.

Shell had confirmed plans to purchase 33 per cent of the Guyane Maritime Permit, around 150 kms off the coast of French Guiana, and had an option to buy another 12 per cent.

Tullow is in negotiations with another party about buying another share in the block and hopes for a deal by year end.

The companies did not disclose the amount Shell paid but analysts at Collins Stewart put a net asset value of over £100 million on the block.

Tullow has interests in over 85 exploration and production licences across 23 countries in Africa, Europe, South America and South Asia.

Additional reporting: Reuters