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Tullow write off US671m on failed drills

Wednesday, February 13 10:09:21

Irish-owned, Africa-focused oil company Tullow Oil took a $671 million writedown with its 2012 results against just $121 million a year earlier to account for unsuccessful drilling and the resulting reduction in the value of its assets.

Reporting 2012 profits that were little changed and within a range of analysts' forecasts, Tullow also reported drilling results which it said showed "the first potentially commercial flow rates achieved in Kenya" from its Twiga South-1 well.

Another keenly-watched prospect in its Kenya-Ethiopia portfolio, the Paipai-1 well, encountered "difficult hole conditions" Tullow said. It hopes to draw some conclusions on it by the end of February.

Tullow Oil Plc has a record 49 wells planned this year, and has been under pressure to deliver some good drilling news after a disappointing trading update in January.

Although one of the industry's best performing drillers of recent times, Tullow had a mixed year in 2012. On the production side, it reaffirmed January's guidance for 2013 at 86,000-92,000 barrels of oil equivalent per day.

Aidan Heavey, Chief Executive, said that 2012 was a year of major progress for Tullow.

"We materially enhanced the business with a basin-opening oil discovery in Kenya, by adding highly prospective new licences in Africa and the Atlantic Margins, refinancing our debt and partially monetising our Ugandan assets. The Jubilee Field in Ghana is now approaching its full potential and provides the base for our production profile and operational cash flow. Our financial position underpins our highly ambitious 2013 exploration programme which has high-impact wells planned in Kenya, Ethiopia, Norway, Mauritania, Mozambique, Cote d'Ivoire and French Guiana. This focus on exploration-led growth, together with active portfolio management and Tullow's strong balance sheet, provides an excellent platform for growth in 2013 and beyond," he said.