Tullow revenue falls 18% in 2009

Revenue at Tullow Oil is expected to fall almost 18 per cent in 2009, the company said today, as lower oil prices and sales volumes hit the firm.

The firm also announced it would raise £925 million from a new share placing.

In a trading statement this morning, the company said total revenue for 2009 is expected to be around £570 million, compared with £692 million in 2008.

Capital expenditure for the year would reach £690 million, the firm said, predicting a rise to £990 million in 2010.

At December 31st 2009, the firm's net debt was about £720 million.

The company said its exploration and appraisal success rate reach a record 87 per cent during the year.

Issuing an update on its production activities, Tullow said the Ugandan pre-emption and farmdown process was well advanced, and the first phase of the Uganda Block 2 development programme was underway, focused on appraisal drilling.

The Phase 1 Jubilee development project is on schedule for fourth quarter first oil.

Tullow said working interest production averaged 58,300 boepd in 2009, in line with previous guidance, and is expected to average 55,000 to 57,000 boepd in 2010.

The company also announced an equity placing of 80.4 million shares - about 10 per cent of its existing share capital - to pay for development of assets in Uganda. The company is seeking to buy out its partner Heritage Oil in three Ugandan oil exploration blocks at a cost of $1.5 billion (€1 billion). The sale has been approved by Heritage's shareholders, but Italian giant Eni has also offered $1.5 billion for the Ugandan interests.

Tullow exercised its right of first refusal over the sale by its partner, but the purchase must also be approved by the Ugandan government.

The company is actively seeking a development partner for the project, with Chinese firm CNOOC put forward as a likely candidate.

Chief executive Aidan Heavy said 2009 had been a great year for Tullow, and the company was confident about 2010.

"We de-risked our portfolio with material discoveries and consolidated our reputation as an exceptional explorer. The Jubilee development in Ghana remains on track and will firmly establish us as an offshore operator in Africa with the ability to deliver world-class projects. Today's equity placing and Ugandan farmdown will ensure that we have the right capital structure to deliver further material value for all stakeholders across our entire portfolio," he said.

"Aligning interests in Uganda with a like-minded long-term partner represents a unique opportunity to create a basin-wide development plan that truly fulfils the needs and expectations of the Government of Uganda and its people."