LISTED EXPLORATION group Tullow Oil, which has major projects in Ghana and Uganda, posted a fourfold increase in earnings last year on higher oil and gas prices.
Profit before tax grew 162 per cent from £114 million in 2007 to £299 million last year, the group said.
Net income was £223.2 million or 30.49 pence a share, compared with £50.9 million pounds, or 6.96 pence in 2007.
Revenue rose 8 per cent over the year to £692 million from £639 million in 2007 while operating profit was up 59 per cent to £300 million from £189 million.
During the year, the price Tullow received for its oil grew 17 per cent, while gas prices rose 40 per cent.
Oil and gas production fell 9 per cent to 66,600 barrels of oil equivalent a day, primarily as a result of natural decline in mature fields and deferred production due to the re-allocation of capital. However, the group said new field start-ups in 2009 and 2010 should enable it to return to output growth.
Tullow made 17 discoveries at 22 wells last year, leading to a 274 million barrel increase in reserves and resources. It now has a record reserves replacement ratio of 582 per cent, averaging more than 200 per cent per annum for the last three years.
The number of people employed by the group rose 46 per cent last year from 370 to 540 and the company said it aims to increase its headcount to 2,500 people by the end of 2010.
Tullow said it plans to invest about £600 million in projects in 2009, up from about £480 million last year.
Phase 1 of its Jubilee field development in Ghana is on track for first oil in 2010, just three years after the initial discovery well in 2007. The Jubilee field has resource potential of up to 1.8 billion barrels of oil.
Earlier this week Tullow announced a “significant” discovery at the Tweneboa-1 exploration well, located 25km west of the Jubilee field. It also revealed it had raised $2 billion (€1.56 billion) in loans to fund developments.
Tullow has finalised the expansion of its debt facility from $1.2 billion to $2 billion with a syndicate of 15 banks. The deal follows a successful share placing in January which saw the company raise £400 million (€432 million) from shareholders and new investors.
“We decided to get the equity and get the banking market sorted out early because there’s a limited amount of money in the market at present and I think there’s a big advantage in being the first mover. Therefore we opted to raise more than we currently need which puts in a very strong position going forward,” Aidan Heavey, Tullow’s chief executive told the Irish Times.
“It wasn’t particularly easy to raise the loans but we have a very good relationship with the banks which has developed over the years and while many of them are cautious, they have started lending again. In the end, the quality of the assets and our track record proved attractive to them.”
The company said that given the current economic climate, it expects challenging times in 2009 following “an outstanding year” in 2008.
“This year started off better than last year and we’re in very good shape and I think we’ll have a good year regardless of oil prices,” said Mr Heavey.
“2009 is planned on the basis that we can grow the business and give fairly substantial returns to shareholders based on oil costing €40. If oil prices go up, which most people think they will, then there will obviously be additional benefits from that,” he added.
Tullow: 2008 results
Sales revenue: £692m (+8%)
Net profit:£226m (+330%)
Basic earnings per share: 30.9p(+335%)
