Oil exploration company Tullow Oil today beat analysts' forecasts with a 51% jump in net profit, thanks to higher output and strong oil prices. Tullow said its first-half net profit was £95.4m sterling, ahead of an average forecast of £81.6m.
Chief Financial Officer Tom Hickey said the outperformance of expectations was mainly due to lower than expected taxes and the accounting treatment of hedging contracts.
Tullow's operating profit was in line with forecasts at $161m. Revenues jumped by 54% to £310.7m from £201.4m.
The company reported a 10% increase in average working interest production to 62,800 barrels a day. Current production is 70,000 and is expected to reach 75,000 by the end of the year.
During the six month period, Tullow reported strong exploration success with three oil discoveries in Uganda and three gas discoveries in the UK.
But the company said that agreement on a plan to supply gas to a new Namibian power station that would be the country's biggest electricity source had slipped to 2007 from mid to late 2006.
Tullow is in talks with the Namibian government and the state power company, NamPower, which will build the plant.
The project would create a market for gas from the Kudu field off Namibia's southern coast, one of Tullow's largest. Investors had hoped for news of progress on the project today.
'Today's record results demonstrate the quality of Tullow's portfolio and continuing growth of its business,' commented CEO Aidan Heavey.
'While competition for resources, talent and quality acreage is intense, our strategy, based on key skills and well understood regions, has proven effective'.
He said that in the short time, the company remains on track to achieve its production target by the end of the year, while recent exploration results in Uganda and the programmes planned in India and Namibia provide outstanding opportunities for growth.
'The outlook for Tullow remains very positive', he concluded.
Tullow has activities in the UK, in Gabon, Cote d'Ivoire, Congo, Equatorial Guinea and Namibia in Africa and in Bangladesh and Pakistan in South Asia.
Tullow shares were up 6 cent at €3.98 in Dublin this afternoon.
