Tullow Oil Posts Solid Results

Aidan Heavey – CEO of Tullow Oil Plc     Tullow Oil Plc delivered strong financial results in 2012 and significantly strengthened its balance sheet through portfolio activity and refinancing. Operating profit grew 5 percent to $1.2 billion compared to $1.1 billion in 2011, representing an increase in sales volumes. The company’s gain on the farm-down in Uganda was largely offset by a significant increase in total exploration write-offs as it took action to reshape its portfolio. Production from its Jubilee field, which was its largest producing asset, was fully remediated in 2012 at a lower cost than expected. Aidan Heavey, Chief Executive Officer (CEO) of Tullow Oil PLC, who disclosed this at the company’s 2nd Investor Forum, yesterday in Accra said sales revenue grew 2 percent to $3.2 billion principally as a result of a 2 percent increase in sales volumes. Profit from continuing activities before tax was up 4 percent to $1.1 billion as a result of a combination of factors. These included $40 million increase in sales revenue, $70 million in pre-tax gain on Uganda farm-down, which was partly offset by an increase in exploration write-downs of $550 million and higher costs. Profits for the year from continuing activities decreased three percent to $666 million compared to $689 million in 2011 while earnings per share decreased by 5 percent to 68.8 cents compared to 72.5 cents recorded in 2011. On production and commodity prices, he indicated that working interest production averaged 79,200 barrels of oil per day, an increase of 1 percent compared to 78,200 recorded for 2011. “The increase was primarily due to production from the Jubilee field offset by decline in mature fields. Sales volumes averaged 68,000 barrels of oil per day up 2 percent compared to the figure recorded in 2011. “On average, oil prices in 2012 were consistent with 2011 levels. Realized oil price after hedging for 2012 was US$108.0/bbl.” He said that underlying cash operating costs, which includes depletion and amortization and movements on the underlift/overlift, amounted to $437 million, adding that the increase of 8 percent was principally due to a higher proportion of fixed operating cost on mature fields with declining production Write-offs associated with unsuccessful exploration activities during the year under review in Guyana, Ghana, Sierra Leone, Cote d’Ivoire, Suriname, Tanzania and Uganda, as well as new venture activities and licence relinquishments totaled $300 million. “When the unsuccessful 2012 exploration activities is added to the half-year write-off of $371 million, the total write-off for 2012 was $671 million.” Shareholders on the register of the company will receive their final dividend of 8.0 pence per share tomorrow, May 16, 2013. The initial dividend for the first part of 2012 was 4 pence per share.       Source: Business Guide