More on Tullow Oil
Tullow Oil: H1 2006 trading statement
Independent oil company Tullow Oil announced that trading for the first half of 2006 was at “record” levels. Given the buoyant oil market and Tullow’s recent performance, this should come as no surprise to followers of this stock.
Higher output; half year working interest production was up 8% (to 63,200 boepd), and better prices were the drivers of earnings. Tullow said current production is running at 72,000 boepd and further “strong growth” in production is expected in H2.
The company’s current development programme includes the Schooner and Ketch fields (UK), the Okume Complex (Equatorial Guinea), West Espoir (Cote d’Ivoire), Bangora (Bangladesh) and Chachar (Pakistan).
The company’s exploration programme has delivered a number of successful exploratory wells which bode well for medium term production. The company also said it was on the look out to acquire further interests in developed fields – one of the means by which the company has consistently succeeded in expanding output.
With output expected to increase steadily in the medium term and the outlook on oil prices remaining firm, prospects look bright. Tullow said working interest production in 2006 is expected to average around 66,000 boepd and exceed 75,000 boepd by year-end.
The share trades at 383.25p, on a prospective PE (2007 earnings) of 12.9x, within the sector range and looking relatively attractive, given the strong growth prospects. The yield is a poor 1.2%, but this is only to be expected in a fast growing company (ie the company is ploughing back much of its earnings into the business in order to finance further growth).
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