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Tullow Oil: H1 results
Tullow Oil, the independent oil exploration and production company, announced very strong results for the half year to June 2005. Sales increased 163% to £201.4m and pre-tax profits rose 427% to £91.4m (1H 2004: £17.3m).
A combination of high oil prices, the benefit of the inclusion of Energy Africa for a full six months, a three month contribution from Schooner and Ketch (new production interests acquired in March) and an increase in output were responsible for the improved performance.
Tullow's working interest production averaged 57,350 boepd, 106% ahead of last year, while sales volumes averaged 54,200 boepd. Average prices realised during the period were $41.7/bbl (post hedging) (1H 2004: $34.2/bbl) for oil and 28.8p/therm for UK gas (1H 2004: 23p/therm).
Tullow has interests in over 90 production and exploration licences in 15 countries in NW Europe, West Africa and South Asia. The company is planning to expand its exploration activities participate in up to 15 exploration wells over the next 12 months.
The company is bullish in its outlook and with hurricane activity pushing up oil prices even further, the short term outlook for the sector is very good. In the longer term oil prices are expected to settle at a $45-$55 range per barrel, still an extremely profitable level.
The share trades at 218.5p, on a prospective PE (2005 earnings) of 14.8x, at the upper end of the sector range, supported by the company's recent rapid growth. The yield is 0.7%.