Tullow Oil comes up short in 2012

Oil titan Tullow missed production targets last year, while write-offs for unsuccessful drilling soared, the group revealed on Friday morning.

Oil titan Tullow missed production targets last year, while write-offs for unsuccessful drilling soared, the group revealed on Friday morning.

Group working interest production last year averaged just 79,200 barrels of oil per day (bopd), below the forecast range of 80,000-84,000 bopd, due to the enforced shutdown of Tullow's non-operated production in the CMS area of the UK in early December following safety issues. This has now been resolved.

Average production is expected to rise to 86,000-92,000 bopd in 2013.

Meanwhile, exploration write-offs more than doubled in 2012 due to a number of unsuccessful drilling activities.

Write-offs associated with unsuccessful exploration activities, new ventures activity and licence relinquishments totalled $219m in the second half, compared with just $80m in the first six months of the year.

As such, the total unsuccessful exploration write-off for 2012 activities is expected to total $299m, up from $121m in 2011. When combined with the asset value reduction of $371m reported in the first half of 2012, the total write off is expected to be approximately $670m.

Upbeat outlook after Kenyan successThe firm said that it expects a "very successful 2013" after "accomplishing much" last year: establishing Kenya as a new hydrocarbon province, resolving Jubilee production issues and raising commercial reserves.

Chief Executive Aidan Heavey said: "This continuing process of portfolio management, alongside increased Jubilee production and a strengthened balance sheet, provides a strong base from which our exploration-led growth strategy can continue to deliver.

"Tullow is now well positioned for a very successful 2013 and growth beyond."

Tullow said that the clear highlight in Exploration & Appraisal last year was Kenya, which was established as a new oil nation with two frontier discoveries at Ngamia-1 and Twiga South-1.

"These discoveries are, alongside successful exploration in Uganda and recent major offshore gas discoveries by industry peers, establishing East Africa as an exciting new energy region."

Tullow achieved a 72% (33 out of 46) exploration and appraisal success ratio last year.

The company said it would invest $0.9bn in drilling over 40 wells in 2013, taken from the capital expenditure budget of $2.0bn (up from $1.9bn in 2012).

Recommended

Best junior stocks and shares ISA platforms
Isas

Best junior stocks and shares ISA platforms

A junior stocks and shares ISA is a great way to save for your child tax-efficiently. But it can be confusing deciding which investment platform to ch…
25 Nov 2022
Share tips of the week – 25 November
Share tips

Share tips of the week – 25 November

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
25 Nov 2022
Investing in a recession: 5 moves investors should make now
Investment strategy

Investing in a recession: 5 moves investors should make now

As we enter a recession, here’s what investors should do with their portfolios.
23 Nov 2022
It’s time to focus on Fuller’s
Share tips

It’s time to focus on Fuller’s

The pub sector has had a torrid two years, but this group is resilient and poised to prosper. We take a closer look at Fuller’s.
21 Nov 2022

Most Popular

Wood-burning stove vs central heating ‒ which is cheapest?
Personal finance

Wood-burning stove vs central heating ‒ which is cheapest?

Demand for wood-burning stoves has surged as households try to reduce their heating costs this winter. But how does a wood burner compare with central…
21 Nov 2022
Fan heater vs oil heater – which is cheaper?
Personal finance

Fan heater vs oil heater – which is cheaper?

Sales of portable heaters have soared, as households look to cut their energy costs. But which is better: a fan heater or an oil heater? We put them t…
21 Nov 2022
Santander launches new bank account – is it any good?
Bank accounts

Santander launches new bank account – is it any good?

Santander’s new accounts gives you up to £20 cashback a month and 4% interest rate on savings.
25 Nov 2022