Tullow Oil likely to double revenues this year, says chief

TULLOW COULD “easily” increase its production almost five-fold within five years, pumping 250,000 barrels of oil every day, chief executive Aidan Heavey said yesterday.

Speaking after a shareholder meeting in Dublin, Mr Heavey pointed to the potential of the group’s Ugandan interests, which are due to come on stream next year and could contain 2.5 billion barrels of oil.

“Last year, we produced 58,000 barrels per day. We could easily do 250,000 per day when Uganda comes on stream,” Mr Heavey said.

Tullow shareholders had earlier heard that the company is on track to more than double its revenues in 2011 from last year’s $1.1 billion, as first production from its Ghanaian Jubilee field feeds through into results.

Mr Heavey said 2010 had been “a very significant year” for Tullow, mostly because of the Jubilee field, which is the company’s first “deep-water” venture.

Tullow plans to spend $1.5 billion on development this year, an outlay Mr Heavey described as “comfortably within our cashflow”.

He signalled that while major acquisitions may not be on the horizon, there “should be a continual stream of deals”.

Equally, Tullow will divest more mature assets as newer interests such as Jubilee come on stream.

Alongside its various African projects, Tullow is also working in parts of South America (“a very unexplored place”) and Asia. It has no plans to seek offshore Irish exploration licences, Mr Heavey said.

The group has been active in recent weeks, buying Nuon Exploration Group in the North Sea for €300 million and spending $305 million on additional interests in Ghana.

Its finances will be boosted in the near term by the receipt of $2.9 billion due from the sale of part of its Ugandan Lake Albert field to French multinational Total and Chinese group CNOOC.

Mr Heavey said the farm-down deal, which will wipe out Tullow’s debt and contribute to reserves, is nearing its final stages. When it is completed, the three companies will work together to develop the Ugandan interest.

Shareholders also heard Tullow is working to recover the $313 million it has lodged in a Ugandan escrow account in respect of a tax dispute relating to the group’s buyout of its then partner’s Ugandan interests last year.

“We believe we will get it all back,” Mr Heavey said, adding that a court hearing on the matter was ongoing.

Shareholders, universally a content group at the meeting, were told that Tullow will “review” its dividend policy in the future, having kept its payout steady last year in light of high levels of development spending.

Shares in Tullow fell yesterday, shedding 15p to close at 1302p in London.