Tullow helped by higher volumes and sustained high prices

Tullow Oil has hailed an 'excellent' first half, with revenues up by a tenth and profits up by a half, driven by increased production, sustained high oil prices and profit on a Uganda farm-down.

Sales revenues increased by 10% from $1,062m o $1,167m in the six months to June 30th, helped mainly by a 6% increase in sales volumes.

During the half-year, average production increased by 3% from 75,100 barrels of oil equivalents per day (boepd) to 77,400. Tullow expects average output to ramp up to 80,000-84,000 boepd with an exit rate of over 90,000 boepd.

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Meanwhile, the realised price of oil was $110.7 per barrel, slightly lower than the $112.0 per barrel price seen during the first half of last year.

Meanwhile, pre-tax profits surged 48% from $608m to $829m, though the group said that growth was held back by increased exploration write-offs and higher costs.

"In the first half of 2012 we continued to build on the record results achieved in 2011. Our exploration-led growth strategy continues to yield an exceptional success ratio and Tullow has, with the discovery of oil onshore Kenya, opened up a fourth new basin within five years," said Chief Executive Aidan Heavey.

In February, the group completed a farm-down of two-thirds of its interests in the Lake Albert Rift Basin, Uganda, to CNOOC and Total for a consideration of $2.9bn, something which has "transformed" Tullow's financial flexibility. The company gained $701m on the farm-down.

"Our balance sheet has been transformed by the Uganda farm-down and our financial strength will continue to improve through growing production, as Jubilee fulfils its potential. A strong pipeline of activity in the second half of 2012 promises another excellent year for the group," Heavey said.

The interim dividend was maintained at 4p per share.

BC