Tullow expects revenues for first half of year to top $1bn

EXPLORATION GROUP Tullow Oil expects production from its Jubilee field in Ghana to reach 120,000 barrels of oil a day by August and estimates that revenues for the first half of the year will exceed $1 billion (€694 million).

The group said production from Jubilee, which is off the west African country’s coast, is running at 80,000 barrels a day. It expects this to increase to 120,000 by August, according to a trading statement yesterday.

The company expects revenues for the first half of the year to be $1.05 billion, compared with $486 million during the first half of 2010.

The increase in sales is down to increased production, as Jubilee came on stream late last year, and the rise in oil prices.

Tullow’s sales from working interests in its assets averaged 62,400 barrels a day. The group expects that, for the whole year, this figure will be between 90,000 and 94,000, as its recent purchase of the Nuon oil and gas interests in the North Sea are likely to boost production.

In most cases, Tullow has partners with interests in its oil and gas licences and does not own them outright.

The group spent $675 million on exploration activities during the first half of the year. According to yesterday’s statement, this is still on target to reach $1.5 billion by the end of the year.

In addition, Tullow’s €300 million purchase of Nuon Exploration and Production has been completed. It is waiting for regulators to approve its $305 million purchase of EO Group’s interests in Ghana. The company announced both deals recently.

Over the last six months, Tullow continued to make progress with its agreement to farm down a two-thirds share in its Ugandan interests to French multinational Total and Chinese operator Cnooc for $2.9 billion.

This requires the approval of the Ugandan government, which recently signed a memorandum of understanding with Tullow, moving the deal closer to being finalised.

Tullow chief executive Aidan Heavey said yesterday the company expected to complete the sale of the assets soon.

Mr Heavey said the group expected to deliver record financial results for the first half of 2011 when they are published in the last week of August. “We have enhanced our portfolio through acquisitions in the Netherlands and Ghana, and our high level of exploration and appraisal success continues,” he said.

He added that the company was planning more such activity in the second half of the year, including seeing the results of the first well it has drilled in South America.