Published: March 10 2011 00:41 | Last updated: March 10 2011 00:41
Tullow Oil said on Wednesday that it hoped to proceed with its Lake Albert project in Uganda this summer.
The project, a partnership with France’s Total and China’s Cnooc, has been held up since last year by a tax dispute with Uganda’s government.
“The whole thing will be completed by the summer. What’s important is clarity in the legal and tax system and that [Uganda’s oil] industry is developed properly,” said Mr Heavey.
Tullow said its Lake Albert concession could hold up to 3.5bn barrels of oil. It has been estimated that developing the field will cost about $10bn (£6.2bn).
Mr Heavey’s statement came as Tullow announced a sharp increase in pre-tax profits, from $32.5m to $151.9m, for 2010. Revenues rose from $915.9m to $1.09bn. Profits were boosted by the higher average price of oil, which rose from $60 a barrel to $78, outweighing a slight decrease in average production, down 200 barrels a day (b/d) to 58,100 b/d.
Diluted earnings per share rose from 3.1 cents to 6.1 cents. The final dividend is held at 4p for a maintained total of 6p.
The company’s showpiece Jubilee field in offshore Ghana came onstream last December and is projected to boost Tullow’s total production to an average of between 86,000 b/d and 92,000 b/d this year.
Cash from Jubilee is funding a $1.5bn capital expenditure programme. Mr Heavey said the company was participating in drilling 40 exploration wells this year in east Africa and South America as well as developing discoveries in Ghana, Sierra Leone and Liberia.
Net debt stood at $1.94bn at the year end. The shares closed down 47p at £14.13.
● FT Comment
Tullow’s much-hyped Lake Albert project in Uganda is an important pillar of the company’s heady share premium. Mr Heavey’s prediction of a tax armistice with the government by the summer is typically bullish, especially given the region’s notorious politics: in neighbouring Democratic Republic of Congo, Tullow decided to cut its losses after its exploration licences were reassigned. A spectacular run of exploration success and good prospects in west Africa and French Guiana explain why Tullow trades at 24 times its projected 2011 earnings. Compared to peers Premier at 20 times and Afren at four times, Mr Heavey will need to bring Tullow’s vaunted potential onstream to justify that price.
| Sales | Pre-tax profits | Earnings per share | Dividend |
|---|---|---|---|
| $1.09bn | $151.9m | 6.1 cents | 6p |
| ↑ 19% | ↑ 367% | ↑ 91% | 0% |
However, Aidan Heavey, chief executive, said that the company was close to reaching a deal with Yoweri Museveni, Uganda’s president. “We’re finalising a memorandum of understanding with government that will allow the joint venture with Cnooc and Total to go ahead.
“The whole thing will be completed by the summer. What’s important is clarity in the legal and tax system and that [Uganda’s oil] industry is developed properly,” said Mr Heavey.
Tullow said its Lake Albert concession could hold up to 3.5bn barrels of oil. It has been estimated that developing the field will cost about $10bn (£6.2bn).
Mr Heavey’s statement came as Tullow announced a sharp increase in pre-tax profits, from $32.5m to $151.9m, for 2010. Revenues rose from $915.9m to $1.09bn. Profits were boosted by the higher average price of oil, which rose from $60 a barrel to $78, outweighing a slight decrease in average production, down 200 barrels a day (b/d) to 58,100 b/d.
Diluted earnings per share rose from 3.1 cents to 6.1 cents. The final dividend is held at 4p for a maintained total of 6p.
The company’s showpiece Jubilee field in offshore Ghana came onstream last December and is projected to boost Tullow’s total production to an average of between 86,000 b/d and 92,000 b/d this year.
Cash from Jubilee is funding a $1.5bn capital expenditure programme. Mr Heavey said the company was participating in drilling 40 exploration wells this year in east Africa and South America as well as developing discoveries in Ghana, Sierra Leone and Liberia.
Net debt stood at $1.94bn at the year end. The shares closed down 47p at £14.13.
● FT Comment
Tullow’s much-hyped Lake Albert project in Uganda is an important pillar of the company’s heady share premium. Mr Heavey’s prediction of a tax armistice with the government by the summer is typically bullish, especially given the region’s notorious politics: in neighbouring Democratic Republic of Congo, Tullow decided to cut its losses after its exploration licences were reassigned. A spectacular run of exploration success and good prospects in west Africa and French Guiana explain why Tullow trades at 24 times its projected 2011 earnings. Compared to peers Premier at 20 times and Afren at four times, Mr Heavey will need to bring Tullow’s vaunted potential onstream to justify that price.
No comments:
Post a Comment