Uganda Operations Push Tullow Profits Higher

page geneva; font-size: small;”>These results for the six months ended 30 June 2013 highlight ‘a substantial increment in profit’ after excluding the impact of the 1H 2012 Ugandan farm-down profit on disposal.

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“Balance sheet remains strong with net debt of $1.7bn and $1.7bn headroom,” states the report.

Speaking at a presentation in London, Aidan Harvey, the Chief Executive said, “Tullow is in the final stages of agreeing on the key components of the Lake Albert Basin development in Uganda.”

According to report, the financial results are in line with market expectations. “Production has increased by 14 percent to 88,600 boepd, first half revenue is up by 15 percent to $1.3bn and operating cash flow before working capital movements exceeds $1bn for the first half.

Underlying profit also substantially increased after excluding the impact of the 1H 2012 Ugandan farm-down profit on disposal.

It also indicates that basin-opening E&A success continues onshore Kenya; following success at Etuko-1, Pmean resources are expected to be well in excess of 300 mmbo, exceeding the threshold for development studies to commence.

Meanwhile the oil major also made a successful outcome in court action versus Heritage Oil where $343m was ordered to be paid to Tullow by 26 August 2013.

Mr Heavey says the oil group has continued to perform well in the first half of 2013. “Our exploration-led growth strategy delivered major successes in Kenya and Ethiopia, further enhancing East Africa as a new oil region.”

He adds: “We have six exciting exploration campaigns under way in the second half in 10 countries with 20 wells targeting multiple basins in Kenya, Ethiopia, Mozambique, Mauritania and Tullow’s first operated well in Norway.”

He notes that Tullow also has a considerable pipeline of development activity. This includes reviewing potential development options for the over 300 million barrels of oil discovered onshore Kenya, the farm down of our interest in the TEN project in Ghana and reaching the final stages of agreeing the key components of the Lake Albert Basin development in Uganda.

The report indicates activities in Uganda have this year focused on the remaining exploration and appraisal operations, field development planning and engagement with the Government of Uganda to agree the basin-wide development concept.

Exploration and appraisal activities across the basin have continued and activity has included two exploration wells, six appraisal wells, 11 flow tests and seismic acquisition.

“These successful activities continue to support our estimates of gross recoverable resources of 1.7 billion barrels of oil,” says Heavey.

During this period, the Lyec-1 well in EA1A area successfully discovered hydrocarbons and Ondyek-1 well to the West of Nile was unsuccessful and exploration in this area is now complete.

Significant progress has been made with the Government of Uganda and our partners regarding the development options for the Lake Albert Basin.

Discussions with the Government are ongoing to finalise the details of a Memorandum of Understanding (MoU) aimed at agreeing a basin commercialization plan.

The MoU concept, made public following the recent meeting of the Presidents of Uganda, Kenya and Rwanda, involves an integrated development of the upstream, an export pipeline and a refinery sized initially at 30,000 bopd with the potential to expand to 60,000bopd to meet available market demand.

The partnership has completed the concept stage of the pipeline studies and discussions with Government on pipeline cooperation are ongoing.

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