Business News of 2014-05-09

Tullow records buoyant growth

The Board of Directors of British energy firm, Tullow Oil, has recommended a dividend of 0.8 dollar per share to its shareholders, bringing the total payment for 2013 to US$0.12 per share or US$167.4 million.
The Executive Chairman of Tullow Ghana, Mr Duke Duker, said the energy company achieved a solid performance in the year by attaining a production target of 84,200 barrels of oil per day.
Tullow’s share price suffered a major dip in 2013, declining by 32 per cent as market attention switched from long-term value creation through exploration to short-term cash returns to shareholders.
Tullow, which is the lead operator of Ghana's offshore Jubilee field, has already hit the daily production target of 100,000 barrels of oil in April this year.
The energy firm’s sales revenue last year increased by 13 per cent to US$2.6 billion (2012: US$2.3 billion) as gross profit increased by seven per cent to US$1.4 billion.
However, profit after tax declined significantly to $216 million (2012: $666 million), mainly due to higher exploration write-offs and lower portfolio management profits, the executive chairman said.
“Strong cash flow from operations, amounting to US$1.9 billion (2012: $1.8 billion), and a highly successful debut bond issue enabled Tullow to maintain a strong balance sheet while diversifying its sources of funding”.
“Cash flow from high margin production continues to underpin our exploration-led growth strategy and in the course of the year, we completed the first planned maintenance shutdown of the Jubilee operations in Ghana, within budget and ahead of schedule”, he added.
According to Mr Duke Duker, the phase 1A development also proceeded according to plan, and gross production during the year averaged approximately 100,000 barrels of oil per day.
Disposing of non-core assets
The energy firm’s attempt to sell of its non-core businesses and monetising a proportion of its development assets was delayed by the negative market sentiment towards the resource sector and limited availability of finance for smaller enterprises, particularly for companies who have expressed interests in the assets.
Debts facilities
Tullow has US$4.3 billion debt facilities in its books and as of the end of December 2013, the company registered a net debt of US$1.9 billion and an unutilised debt capacity of US$2.4 billion.
“We also maintain a conservative financial profile and an appropriate gearing level of 35 per cent at the end of the year,” said the executive chairman.
The company’s financing initiatives are part of a funding strategy that underpins its business strategy. “This gives us both financial strength and balance sheet flexibility. We combine commercial bank facilities, debt capital markets, multilateral project financing, operating cash flow and portfolio management to fund the business”, he said.
Tullow’s exploration-led strategy is unique in the oil and gas sector and is focused on exploring for oil. “Being exploration-led means we have set up our business to have sufficient cash flow in place to invest at least US$1bn on exploration each year, “ Mr Duke said.
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