Tullow Oil: trading statement

8:09 a.m. Tue 31 Jan 2006

Independent oil and gas producer Tullow Oil said trading for 2005 was at record levels, according to the company’s latest trading statement. Following an excellent first half, Tullow said a strong production performance combined with favourable oil and gas prices have been the drivers of earnings.

Average group working interest for the year has risen to 58,450 boepd(compared to 57,350 in H1). Tullow’s UK gas production has reached an all time high of 200 mmscfd ( millions of standard cubic feet per day). Current group working interest productions is now around 66,000 boepd and is expected to average 68,000 boepd in 2006, ending 2006 at around 75,000 boepd.

The company’s exploration programme has been fairly successful with five out of 11 exploratory wells drilled in 2005 yielding hydrocarbon discoveries. A further 8 exploratory wells are to be drilled in the next three months.

The outlook for oil prices in the medium term is firm and will steady increases expected in Tullow’s production growth prospects look good.

The share trades at 308.5p, on a prospective PE (2006 earnings) of 13.6x, towards the upper end of the sector range, the premium being warranted by the relatively stronger growth prospects. The yield is a negligible 0.76%