LONDON AND Dublin listed exploration group Tullow Oil expects capital expenditure for 2011 to be in the region of $1.5 billion (€1 billion) as it ramps up production at its Jubilee oil field in Ghana.
In an interim management statement yesterday, Tullow said Jubilee production revenues, combined with the proceeds of a farm-down deal in Uganda, would put its balance sheet in a “very healthy” position. This would enable it to fund significant exploration and development programmes.
It also said delays were experienced while drilling a well at the Zaedyus prospect in French Guiana, but a result was now anticipated in early August.
It said “major development decisions” were to be made for Enyenra/Tweneboa and Jubilee, and over a number of significant wells with basin-opening potential in West Africa and South America.
Net debt at April 30th stood at about $2.1 billion.
“The conclusion of the Uganda farm-down will enable the flow of $2.9 billion of cash to Tullow, completely relieving any balance sheet tension and allowing onward investment,” said Davy analyst Job Langbroek. “A positive drilling outcome will likely galvanise the share price as the market refocuses on the exploration portfolio in the coming months.”
Davy now values the group at 1,487p per share. The stock was trading on the London Stock Exchange yesterday at 1,332p.
However, Goodbody analyst Gerry Hennigan said there was nothing in yesterday’s statement to drive the share price ahead.
The company’s agm took place in London yesterday, but a “shadow” agm will be held in Dublin on June 2nd for Irish shareholders. Tullow will release its half-yearly trading update and operational update on July 5th.
