18 February 2013

Kenya Oil Discovery Boost Tullow Earnings

Kampala — Oil and gas exploration giants, Tullow Oil plc, have released their annual financial performance for the year ending December 31 2012 revealing significant health results and a strengthened balance sheet for the London based conglomerate.

The group in a statement declared that a number of activities played positively to the growth among which was the success story of discovering oil in Kenya at Ngamia-1 and Twiga South-1 early last year and a $2.9bn earning from Uganda's farm-down and successful business deals in Europe and Africa.

Similar stories in Ghana Ethiopia, Norway, Mauritania, Mozambique, Côte d'Ivoire and French Guiana played a role in ensuring another solid financial performance in 2012.

While the oil price was volatile throughout the year due to economic and political uncertainty, it averaged $108 per barrel, in line with 2011.

Sales revenue grew by 2% to $2,344 million (2011: $2,304 million) due to higher sales volumes. Profit from continuing activities before tax increased by 4% to $1,116 million (2011: $1,073 million) as the $701 million pre-tax gain on the Uganda-farm down was largely offset by an increase in total exploration write-offs.

This amounted to $300 million for 2012 activities coupled with a further asset write-down announced at the half year giving a total of $671 million (2011: $121 million) and higher operating costs associated with mature fields.

Profit from continuing activities after tax declined 3% to $666 million (2011: $689 million) and basic earnings per ordinary share from continuing activities decreased 5% to 68.8 cents (2011: 72.5 cents).

In 2012, Tullow invested close to $1 billion in exploration and appraisal, drilling 46 Exploration & Appraisal wells with an overall success ratio of 74%.

The discovery of a new oil basin in Kenya - the fourth major basin-opening discovery by Tullow in the past six years - was the highlight of the year and significant success was also achieved in Uganda and Ghana. T

here were also some disappointments, particularly the Zaedyus-2 well, which failed to intersect oil but nevertheless added significantly to our knowledge of this new oil basin, offshore French Guiana.

The farm-down of Uganda transformed Tullow's balance sheet and high-value production growth in Ghana underpins strong operational cash flow for the Group, approaching $2 billion per annum. In November 2012 Tullow extended the final maturity of its $3.5 billion Reserved Base Lending credit facility to 2019 and took the opportunity to create a more flexible facility to better serve its funding needs.

Aidan Heavey, Chief Executive, Tullow described 2012 was a year of major progress for Tullow.

"We materially enhanced the business with a basin-opening oil discovery in Kenya, by adding highly prospective new licences in Africa and the Atlantic Margins, refinancing our debt and partially monetizing our Ugandan assets."

Heavey said in a statement. East Africa remains a key area of operation for Tullow with increased hope for new oil being found.

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