TULLOW OIL intends to step up exploration activities after it raises more than €1 billion from investors through the share placing it announced yesterday.
The Irish company’s chief executive, Aidan Heavey, also indicated that multinationals CNOOC and Total are front runners to become partners in a concession in Uganda with the potential to deliver up to 2.2 billion barrels of oil.
Tullow said yesterday that it intends placing over 80.4 million shares with existing and new institutional investors that will raise £925 million (€1.07 billion).
The company said it intends to use part of the proceeds in spending $500 million a year on accelerating its exploration activities and on the development of its existing proven reserves, which include large resources in Ghana and Uganda.
Plans to bring its Jubilee field off Ghana’s coast to production in the final quarter of this year are running to schedule. It has potential reserves of 1.8 billion barrels of oil.
Tullow intends speeding up its appraisal of its Tweneboa 2 licence in the same region. A statement last week indicated that this could potentially hold a new field on a similar scale to Jubilee.
It also intends drilling three new wells in its South American properties, which have the same geological profile as those in west Africa.
The company made it clear that it intends to focus on its core activity, which is exploring for oil and gas rather than the development of proven oil fields. Mr Heavey told analysts yesterday that exploration is what the company does best.
Mr Heavey also confirmed that proposals from Chinese giant CNOOC and French operator Total for the development of Tullow’s Ugandan interests have been passed on to that country’s government, which will have the final say on any plans.
The company is in the final stages of taking full ownership of two blocks in Uganda’s Lake Albert rift basin, which will give control of a total of three licences, with proven reserves of 700 million barrels and the potential to yield a further 1.5 billion.
It intends farming out an interest, possibly up to 50 per cent, in this to at least one development partner.
Earlier, a trading update showed that it expects 2009 revenues to be down 18 per cent at £570 million from £692 million, as lower oil prices and sales volumes hit its existing production.
Tullow earns revenues from oil and gas sales, mainly from licences in the North Sea. 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 firm said its exploration and appraisal success rate reached a record 87 per cent during the year. Working interest production averaged 58,300 barrels of oil equivalent per day (boepd) in 2009, in line with previous guidance, and is expected to average 55,000 to 57,000 boepd in 2010.
