2007 Interim Results Summary
Tullow demonstrated a strong operating performance in the first half of 2007. Production reached record highs and oil pricing continued to be strong, although the realized UK gas price was considerably lower than the exceptional levels of 2006 and this impacted reported results.
The Group continued to deliver major exploration success with a further world-class discovery in Ghana, where upside potential in excess of a billion barrels has been identified. We have also recorded excellent results in Uganda where ongoing programs are extending the existing reserve base and reducing the risk of future prospects. Finally, Tullow significantly enhanced and extended its worldwide exploration portfolio through the acquisition of Hardman Resources, which was completed in January and is now fully integrated.
Successful exploration in the first half of 2007 has transformed Tullow's business growth potential. This success, and the subsequent development and appraisal programs, will result in a significant increase in our rate of investment. Consequently, at this stage, the Board feels it is appropriate to maintain the interim dividend at the 2006 level.
1H2007 1H2006 Change Production (boepd, working interest basis) 69,700 62,800 +11% Realised Oil Price per bbl (US$) 56.09 54.42 +3% Realised Gas Price (pence per therm) 36.86 53.33 - 31% Sales Revenue (£m) 284.9 310.7 - 8% Operating Profit (£m) 111.0 161.0 - 31% Profit Before Tax (£m) 66.6 153.1 -56% Basic Earnings per Share (pence per share) 5.12 14.72 - 65% Interim Dividend per Share (pence per share) 2.00 2.00 Unchanged Operating Cash Flow before Working Capital (£m) 201.8 245.7 -18%
Commenting today, Aidan Heavey, Chief Executive, said:
"The first half of 2007 has been a period of exciting progress for Tullow. Our exploration program in Ghana not only yielded a major discovery, but also de-risked the Group's extensive acreage position in the region. Simultaneously, ongoing success in Uganda continues to confirm the discovery of a new basin with billion-barrel oil potential. Each of these projects has the ability to more than double Tullow's reserve base over the coming years. In addition, we have grown our portfolio of opportunities to over 120 licenses through the acquisition of Hardman Resources.
While results for the first half of 2007 were impacted by difficult trading conditions in the UK gas market, our decision to direct investment towards high-impact exploration and appraisal activities has proven highly effective. As a result, Tullow now has a far greater resource base and upside potential than at any time in the Group's history. Production is expected to average 72-75,000 boepd for the year and we are fully committed to the rapid appraisal and development of the projects that will dominate our future production, reserves and growth prospects. The outlook for Tullow has never been brighter."
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