Tullow's Plunkett Looks Back on Past Year
At the company's annual general meeting Wednesday, Tullow Oil Chairman Pat Plunkett made the following statement:
"During 2006, the combination of strong growth in Tullow's business and favorable oil and gas pricing allowed the Group to report record operational and financial results. In September 2006, the strong financial condition of the business and support of our banks and shareholders also allowed Tullow to undertake the biggest transaction in the Company's history, the US$1.1 billion acquisition of Hardman Resources which completed in January 2007.
"Tullow has a balanced international oil and gas business and is focused on continued growth over the coming years. During 2007 the principal focus will be on the Group's exploration portfolio; important high-impact wells recently commenced in Uganda and Namibia, while a multi-well program in India is also scheduled for later in the year.
"Tullow's UK Southern Gas Basin business achieved record levels of both production and price realization during 2006. The expansion in production was driven principally by steady increases from both the Schooner and Ketch fields, where field operations were optimized and new wells brought on stream, and a strong performance from the remainder of the portfolio. Looking to 2007, the Thurne and Kelvin developments are each progressing satisfactorily and are scheduled to come on stream in the fourth quarter while first gas from the Ketch-9 well is expected towards the end of June, later than previously anticipated. On the exploration front, three gas exploration wells are planned in the Southern North Sea, while oil exploration wells on the Peveril and Acer prospects in the Central North Sea have both been unsuccessful.
"During the second half of 2006 there was a significant reduction in spot UK gas prices as new sources of supply came on stream and relatively mild weather conditions reduced seasonal demand. Looking forward, the overall gas supply and demand balance within the UK should lead to greater overall gas price stability and further convergence between UK and continental European gas prices. Tullow's consistent investment and strong cost control disciplines, allied to an active forward sale and hedging program should continue to ensure that the Group generates attractive returns and maintains production from this business.
"Tullow has been active in Africa since 1986 and has developed a high quality exploration and production portfolio across the continent. During 2006, two important oil field developments came on stream, West Espoir in Cote d'Ivoire and Okume in Equatorial Guinea and a key water injection project also commenced on the M'Boundi field in Congo (Brazzaville). Production from these projects, allied to existing African output and the Chinguetti field in Mauritania, acquired as part of the Hardman transaction, should result in Tullow's African oil production continuing to increase over the remainder of 2007.
"Tullow plans to continue its active exploration program in Africa by drilling a total of 10 exploration wells during 2007, four of which will be in Uganda. Following the successful 2006 drilling campaign, the Lake Albert Rift Basin in Uganda has the potential to become a new world class oil province. The Nzizi-2 appraisal well recently spudded and will be followed by two further appraisal wells on the Mputa discovery in order to refine current reserve estimates. These wells, combined with 3D seismic, will be used to support the sanction of an early production system leading to first oil in 2009. Preparations are also in progress to drill the potentially significant Ngassa and Kingfisher-2 prospects and the Nabors 221 rig has been contracted with a view to commencing this program during the third quarter.
"Tullow's Asian interests demonstrated substantial growth during 2006, with further expansion scheduled for 2007. In Bangladesh, the Bangora project has recently completed its first year of production, during which time two successful appraisal wells were drilled, commerciality was declared and significant increases in production and reserves were recorded. In Pakistan, first gas from the Chachar development is imminent, while a two well exploration program on the high-impact Kohat Block is planned to start in the fourth quarter. Prospects have also recently been selected for a program of four exploration wells on the CB-ON/1 block in India also starting in the fourth quarter.
"Recent progress in Tullow's South American assets, deriving from interests obtained through the Hardman acquisition, has also been good. Tullow has been announced as the successful bidder for two highly prospective Trinidad licenses, 2a/b and Guayaguayare, under the country's sixth exploration licensing round. In Suriname, Production Sharing Contracts were executed in February for two onshore concessions, Uitkijk and Coronie, which lie adjacent to the country's main producing Tambaredjo field. Exploration drilling in Uitkijk is scheduled to commence in July this year.
"A more detailed review of operations and 2007 performance will be provided in our Trading Statement and Operational Update on 11 July. Our Interim Results will be released on 4 September.
"Tullow's objective is to continue to enhance and grow its business across each of its core areas through a mixture of exploration and development activities and continued portfolio management. The strong performance in 2006, alongside the exciting exploration and appraisal programs planned for 2007, allow us to maintain a long-term perspective and effectively allocate our financial and other resources to maintain our growth.
"I would like to thank shareholders and employees for their continued support of the business and I look forward to reporting further progress as the year unfolds. "
Operates 1 Offshore Rigs
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