Tullow interim revenue nears $500m

6th Jul 2010 07:08

Tullow Oil has had a "very good" first half during which production came in on target and revenue increased about 13% to almost half a billion dollars.Group working interest production averaged 55,800 barrels of oil equivalent per day (boepd) in the first six months of the year, in line with market guidance. It's expected to be between 56,000 and 57,000 boepd for all of 2010.An increase in the oil price also provided a fillip. Tullow's realised price was about $77 a barrel pre hedge and $78 post hedges, meaning total revenue is likely to be about $495m versus $438m a year ago.Chief executive Aidan Heavey is excited about the Jubilee Phase 1 development offshore Ghana, which remains on schedule to deliver first oil during November or December.The $1.35bn purchase of Heritage Oil's 50% share in Blocks 1 and 3A in Uganda is now very close to receiving approval from the Ugandan government. "We look forward to working with our new partners, CNOOC and Total, to put together a development plan for the Lake Albert Rift basin," Heavey said.The trio expect to deliver production of more than 200,000 barrels of oil per day by around 2014/15.Elsewhere, seven "potentially transformational" exploration wells are set to begin over the coming nine months; two in Sierra Leone, two in Mauritania, and others in Liberia, Guyana and French Guiana. Tony Shepard at Charles Stanley reckons Tullow's recent underperformance presents a good entry point for investors after long-term exposure to a group with "an excellent exploration record and an exciting drilling programme".Killik Capital's Jonathan Jackson agrees. "The recent setback in the market over the last three months provides investors with an opportunity to pick up the shares of a highclass operator."But Shepard believes the share price appears to be up with events at the moment, so keeps his recommendation as a 'hold'. Jackson also thinks ownership of two highly prospective assets leaves the group "vulnerable to consolidation as M&A picks up in the industry". Interim results are due on 25 August.