Bloomberg News

Tullow Raises Output Target, Expands in Kenya, Sierra Leone

July 05, 2011

(Closes share price in fifth paragraph.)

July 5 (Bloomberg) -- Tullow Oil Plc, the London-based explorer with the most licenses in Africa, raised its full-year production target and said it plans to expand in Sierra Leone and Kenya.

Tullow expects output to rise to as much as 94,000 barrels of oil equivalent a day after the final wells are completed at the Jubilee field in Ghana in August, according to a statement today. It previously gave a forecast of 86,000 barrels to 92,000 barrels a day.

After pre-empting the sale of a 10 percent stake in Sierra Leone’s Block SL-07B-10 by Anadarko Petroleum Corp. to Mitsui & Co., Tullow’s interest in the project, which contains the Venus and Mercury discoveries, will increase to 20 percent. Tullow also raised its stake in Kenya’s offshore Block L8 to 15 percent.

“We are always in the market looking for acreage and opportunities,” Exploration Director Angus McCoss said in an interview. “The whole of the continent of Africa is something we continuously review.”

Tullow rose 3.8 percent to 1,301 pence in London. That was the biggest gain since March 3.

Record Revenue

Revenue is likely to have more than doubled to a record $1.05 billion in the first half, Tullow said. The Jubilee field in Ghana, which is pumping about 80,000 barrels of oil day, will reach a plateau rate of 120,000 barrels a day in “late August,” slightly later than expected, Chief Operating Officer Paul McDade said by phone.

Revenue “was a small 6.6 percent below estimates due to underlift,” or a gain from production that wasn’t received, said Oswald Clint, an analyst at Sanford C. Bernstein & Co. said in an e-mailed report. “The slight delay in production ramp-up has been caused by maintenance to the blow-out preventer and delays in commissioning water injection and gas compressions systems” at Jubilee.

Tullow plans to drill the Jupiter and Mercury-2 wells in Sierra Leone as part of a 15-well African program in the second half of the year. It also completed the acquisition of a 20 percent interest in the DE-7 and Ogueyi blocks from Perenco SA to expand in Gabon.

In Kenya, the company will have the option of acquiring a further 5 percent in Block L8 from Pancontinental Oil & Gas NL’s Afrex Ltd. unit after drilling the first exploration well in 2012.

--Editors: Stephen Cunningham, Randall Hackley.

To contact the reporter on this story: Eduard Gismatullin in London at egismatullin@bloomberg.net

To contact the editor responsible for this story: Will Kennedy at wkennedy3@bloomberg.net


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