Tullow forecasts bumper year

New highs: Tullow has forecast record revenues for 2011

London-listed Tullow Oil is expecting record financial results for 2011 on the back of higher sales volumes.

Tullow said it was expecting total revenue for 2011 to amount to $2.3 billion which would be more than double the $1.1 billion it generated during 2010.

The company is expecting the rise in revenue due to increased sales volumes which averaged 66,800 barrels of oil equivalent per day, up from an average of 47,400 boepd the previous year.

Adding to the record revenue was a jump in oil prices which averaged about $108 per barrel after hedging, compared to $78 per barrel in 2010.

Output during the year also rose, averaging 78.200 boepd in 2011 compared to 58,100 boepd a year earlier.

The biggest rise in output came from the company’s operations off Ghana where it operates the giant Jubilee oilfield.

Tullow’s working interest production from Ghana averaged 23,500 boepd in 2011 compared to just 1100 boepd in 2010.

Jubilee was brought online towards the end of 2010 and the first phase of development was completed in October 2011 which saw the last of the 17 initial wells on the field brought on stream.

Gross production from the field reached a peak of 88,000 boepd during the year before falling towards about 70,000 boepd by the end of the year, with output for the year averaging about 66,000 boepd.

Tullow and its field partners had hoped to ramp output up to 120,000 boepd but was stifled by what the company described as “a technical issue related to the design of the well completions”, adding it did not expect the issue to have any effect on field reserves and resources.

It now expects gross production from the field to ramp up to the plateau rate of 120,000 boepd during the year as it carries out remedial work on existing wells and brings new wells online through the Phase 1A development which was approved earlier this month.

The company also reported further appraisal success at its deepwater Tano block in Ghana, where the Ntomme-2A well encountered 38 metres of light oil pay.

Tullow expects its overall working interest production to average between 78,000 and 86,000 boepd during 2012, with an exit rate of more than 90,000 boepd.

The company also forecast a capital expenditure of $2 billion this year, up from $1.4 billion spend during 2011, with 45% being allocated to exploration activities and the remainder being used for selected development and production activities.

Tullow is scheduled to release its full year results on 14 March.

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