Tullow Oil's first-half profits hit £95m

Rocketing oil prices and increased production drove first-half profits at listed exploration group Tullow Oil to over £95 million (€140 million), the company said yesterday.

Sales at the Dublin and London-listed oil and gas producer grew 54 per cent to £310.7 million in the first six months of the year from £201.4 million during the same period in 2005. Operating profits grew at a similar rate in the first half to £161 million from £104 million during the first six months of 2005, the company said yesterday.

Profit after tax grew 51 per cent in the six months to the end of June to £95.4 million, from £63.1 million during the same period last year. In a statement the company said "trading and production reached new highs, and, combined with continuing favourable oil and gas pricing, led to record profits and cashflow from operations".

Crude oil prices traded at between $59 (€43) and $75 a barrel during the first half of the year, although they hit a record $79 in July, while natural gas costs also reflected these trends.

During the six-month period, oil production from the operations in which Tullow is involved ran at 62,800 barrels a day, a 10 per cent increase on 2005. Currently, it is running at 70,000 barrels a day and the company said yesterday it hoped to reach 75,000 barrels by the end of 2006.

Chief executive Aidan Heavey said the outlook remained positive. "In the short term, we remain on track to achieve our production target of 75,000 barrels a day by the end of the year, while recent exploration results in Uganda and the programmes planned in India and Namibia provide outstanding opportunities for growth," he said.

During the first half, Tullow more than doubled cashflow before expenditure on working capital to £236.4 million from £116.4 million.

Tullow's main operations include stakes in North Sea wells connected to gas networks supplying the south of England. It recently took a share in two wells scheduled to drill later this year.

During the first half, it carried out exploration work on three new oil discoveries in the Albertine basin in Uganda, and began planning initial tests on blocks it has acquired in the Congo. It has also been surveying prospects in India, Bangladesh and Pakistan.

The company closed 6.75 pence up last night at 398.25 pence in London.