Business

Uganda Farm Down Transforms Tullow Financial Strength

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“Tullow had an excellent first half. The Group’s strong financial performance was mainly driven by increased production, sustained high commodity prices and the profit on the Uganda farm down,” Tullow said in a statement today morning.

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“This was partially offset by increased exploration write-offs and increased costs. Industry-leading exploration and appraisal success continued, including the discovery of a fourth new oil basin in five years,” read the statement.

Tullow further said a programme of acid stimulations is increasing production on the Jubilee field, offshore Ghana, and together with Phase 1A development, is expected to deliver plateau production next year.

“In Uganda, the completion of the farm-down has been followed by a ramp up in drilling activity and progression of the Development Plan,” said Tullow.

Commenting, Tullow Chief Executive Aidan Heavey said:

“In the first half of 2012 we continued to build on the record results achieved in 2011. Our exploration-led growth strategy continues to yield an exceptional success ratio and Tullow has, with the discovery of oil onshore Kenya, opened up a fourth new basin within five years.”

He added: “Our balance sheet has been transformed by the Uganda farm-down and our financial strength will continue to improve through growing production, as Jubilee fulfils its potential. A strong pipeline of activity in the second half of 2012 promises another excellent year for the Group.”

Tullow completed the farm-down of 66.6666% of its Ugandan licences to CNOOC Limited and Total for a consideration of $2.9 billion in March 2012.

The farm-down followed the signing of Production Sharing Agreements (“PSAs”) and the Kingfisher production licence with the government of Uganda.

Other key highlights of Tullow included a balance sheet and financial flexibility, fundamentally transformed by Uganda farm-down and interim dividend of 4 pence per share maintained.

The British oil company also recorded a 77% exploration and appraisal success year-to-date (17 out of 22 wells).

Wawa-1 well, offshore Ghana, discovered gas condensate and light oil in a separate accumulation up-dip from TEN; and a major discovery was made at Ngamia-1 in Kenya; 1.1 km thick gross oil bearing interval with over 100 metres of net pay was recorded.

“Kenyan exploration campaign accelerated and increased,” said Tullow.

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