TULLOW Oil has recorded a marginal increase in pre tax profit from £1.159 million in 1994 to £1.186 million last year.

While turning an accumulated deficit in its profit and loss account into a small surplus, the company will not pay, a dividend. This is attributed to its "strategy of maximising shareholder value through exploration and development", said the chairman, Mr Tom Toner.

Sales grew from £3.621 million to £5.308 million. However, much higher operating, administration and exploration costs resulted in a virtual standstill at the pre tax profit level.

Around £600,000 of the exploration costs were exceptional, according to the managing director, Mr Aidan Heavey.

Tullow has not met its target of almost quadrupling its profits in 1995. While the sales contributions from Britain and Senegal were better than expected, delays in Pakistan were responsible for a substantial reduction in anticipated sales from that area. The contribution from Pakistan is not now expected until 1997.

Net borrowings jumped from a marginal amount to £8.8 million. This puts the gearing at 44 per cent. Since the year end a substantial portion of the borrowings have been changed into convertible loan notes, held by the subsidiary in Pakistan. Mr Heavey said there was no need for the group to raise further funds because, following the conversion, it still had the bank facilities in place.

Tullow said the results showed a positive trend in all areas, noting that the profit was achieved without any contribution from its two commercial discoveries in Pakistan and its commercial discovery in Syria. Income from Syria should commence late this year while Pakistan should make a contribution in 1997.

The increase in sales in 1995 was mainly due to a "significant" improvement in gas sales in Senegal and improved prices and higher production rates at its British operations, due to the coming on stream of the north Yorkshire power project and a development well at west Firsby.

During the first six months of 1995, it focused its attention on the appraisal, development and production planning of recent discoveries, Mr Toner said.

In Pakistan, negotiations one the Liberty Power project caused some delay in the appraisal and development of the Sara and Chachar discoveries. In order to maximise "the net present value of its gas reserves", Tullow has held discussions over the past few months with the government of Pakistan, seeking agreement for an early start of gas sales and approval to sell gas production in excess of the daily requirements of Liberty Power.

Early this year, its wholly owned subsidiary, Tullow Pakistan (Developments), issued $10 million (£6.4 million) of 10 per cent secured, redeemable, convertible loan notes. This company, said Mr Toner, had strong cash flow from its operations in Senegal and in Britain.

The group has participated in the ninth exploration bidding round in India. It expects to have an allocation of five blocks late this year or early in 1997.