Shares in Tullow Oil rose in London trading this morning after agreeing to sell its stake in a North Sea gas development to Eni SpA for £210m.
The sale reflects Tullow's "efforts to reposition its balance sheet to allow investment into its Ghanian and Ugandan assets," Job Langbroek, an analyst at Davy Stockbrokers, said.
Tullow increased as much as 2.1 per cent to 938 pence, the highest in almost three weeks. The shares were up 1.4 per cent at 932 pence at 8.22 am.
It signed a memorandum of understanding to sell its 51.69 per cent interest in the UK's Hewett Unit fields and related infrastructure to Eni, Italy's biggest oil company.
Hewitt Unit in the southern part of the North Sea contains about 10 billion cubic feet of net booked commercial gas reserves and is producing about 12 million cubic feet of gas a day attributable to Tullow.
The sale, which will include Tullow's onshore Bacton gas terminal, is likely to be completed by the end of the year. Eni is a partner in the Hewett Unit and the purchase will raise the Italian company's share to 89 per cent.
Separately, Tullow said oil flows from a test well off the coast of Ghana are "excellent" and in line with its expectations. "It shows highly productive reservoirs," Langbroek said.
The Mahogany-2 well at the Jubilee field found oil flowing at a test rate of 5,200 barrels a day and gas flows of about 5.3 million cubic feet a day. "The completed Jubilee production wells should be capable of flowing at rates in excess of 20,000 barrels a day,"
Chief Executive Officer Aidan Heavey said in a statement. Tullow said it plans to start pumping oil from Jubilee in 2010.