Analysis: Analysts yesterday welcomed the upbeat results statement from Tullow Oil, focusing particularly on the group's positive outlook for the future.
Although the figures had been well flagged in an earlier trading update, analysts said the more than doubling of the full-year dividend to 4 pence was very significant. "Good results but not in themselves enough to excite the market," said Peter Hutton, an analyst at NCB. "The real interest is in the clear confidence behind exploration." Mr Hutton also highlighted the significance of such a positive outlook from usually a very conservative management team.
Tom Hickey, Tullow's finance director, said he expects gas and oil prices to continue rising for the foreseeable future. Last year the average price of oil rose 26 per cent, while gas was up 47 per cent. In the UK gas prices have soared to record levels in recent months amid concerns over dwindling supplies. Because the country has become a net importer it's also keen to snap up anything Tullow can produce.
Elsewhere supply concerns have kept demand for oil high and analysts see little change in the near future. Another boost is the predicted reduction in the discount at which Tullow sells its oil to 8-9 per cent, from the current 13 per cent. With regards to drilling, Tullow's pipeline looks healthy. Analysts say recent disappointments in Africa need to be taken in context of the company's overall drilling programme, which is strong.
