Tullow Oil has said it’s prepared to cooperate with Russian natural-gas exporter OAO Gazprom or other partners to advance its Namibian Kudu gas project.
“We will be happy to work with” any party that helps the commercialization of the Kudu field, chief operating officer Paul McDade said today in a telephone interview.
OAO Gazprombank, the lending arm of Gazprom, and Namibia’s state-owned oil company, Namcor, agreed last month to examine financing to build a $1.2 billion 800-megawatt power station, which may be supplied with gas from the Kudu field off Namibia’s southern coast.
Tullow has a 70 per cent interest in the deposit. At 2.45pm the stock was trading down 3 per cent at €10.14 in Dublin giving it a market capitalisation of €8.1 billion.
Namibia depends on electricity imports from South Africa for about half its supply and has entered into agreements with other neighbouring countries to build power plants.
“We are also looking at compressed natural gas, which is a more flexible approach, where we will supply some gas locally for smaller power generators and for export,” Mr McDade said.
Tullow also reported an oil discovery in Uganda today at the Wahrindi-1 well, extending the Victoria Nile Delta reserves, and is continuing to drill at the Ngassa-2 well, where “oil shows have been encountered,” it said.
Revenues for the first six months of the year is expected to be about £290 million (€335.2 million), below the £378 million reported during the same period last year. Net debt at the end of June was £435 million.
"The reduction is due to the lower sales volumes and most significantly the reduction in realised commodity prices during the first half of 2009," it added.
Group working interest production for the first half averaged 59,000 barrels of oil equivalent per day (boepd), 16 per cent lower than the first half of 2008.
The company reduced its full-year average production guidance to 58,000 boepd from 60,000 boepd. "The forecast has been impacted by mixed results from infill wells in the UK, partly offset by higher production in Africa," it said.
Tullow said realised commodity prices were significantly below the 2008 levels with oil falling to about $53 a barrel from $80 in the year-earlier period.
The company, which hedges about 50 per cent of its production, expects prices in the second half to rise from the first half.
The group said its first-half capital expenditure was £425 million and it raised its full-year forecast to £700 million from £600 million.
Tullow also expects to take a 12 million pound impairment charge at the UK Bure North well, a bigger-than-expected exploration write-off of 15 million pounds, and a pretax hedging charge of about 8 million pounds.
The company said its outlook remains very positive and will report its half-year results on August 26th.
Additional reporting Reuters/ Bloomberg.