Tullow Oil recorded a decline in first-half profit as a result of lower gas prices, but said any of its three recent African discoveries has the potential to double the company's commercial reserves.

Speaking after its results were released yesterday, Tom Hickey, finance director, said that recent finds in Ghana, Namibia and Uganda all have the potential to contain more than one billion barrels of oil, making them the group's biggest ever discoveries.

Mr Hickey also stood by Tullow's forecast that production will average 72,000-75,000 barrels of oil equivalent per day (boepd) this year and said the figure is unlikely to increase substantially next year as Tullow focuses on appraising its exploration assets.

Tullow drilled 12 wells in the first half of the year, of which eight were contained oil or gas. Its main focus will be on Africa, with four more wells planned for Ghana, one in Gabon and at least two in Uganda. It is also due to start an exploration programme in India and Pakistan this year.

Analysts expressed disappointment at the results, but said the outlook statement showed "very material progress" in several of its key projects. Davy upgraded its net asset value by 4.5 per cent to £5.54 a share and raised its share price target to £6.25.

The stock yesterday added 5.2 per cent, to close at €8.05 in Dublin, while in London where it is more actively traded, it closed up 6.6 per cent, at £5.47.

Net income was £36.3 million (€54 million) in the six months to the end of June, down from £95.4 million in the same period last year. Revenue slipped just over 8 per cent, to £284.9 million.

These declines came despite an 11 per cent increase in production, to 69,700 boepd, and were attributed by Tullow to a significant decline in the gas price. The average price achieved in the first half of this year was 37 pence a therm, compared with 53 pence in the same period last year. Oil meanwhile remained relatively stable at average of $56 a barrel.

Mr Hickey said he was comfortable with the company's £514.3 million debt, but said Tullow would look to reduce its interests in some of its projects to generate cash for further development.