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Tullow Oil Seeks 1 Billion Barrels in South America, West Africa

  • SOURCE: | qwesa2big
  • Tullow Oil Plc, a U.K. oil and gas explorer, is targeting about 1 billion barrels of resources in South America and West Africa.

    Tullow plans to explore for oil in Liberia, Sierra Leone, and Mauritania in Africa, and French Guiana and Guyana in South America, Chief Financial Officer Ian Springett said. The Zaedyus prospect in French Guiana and Cobalt in Liberia are the “two big ones,” he said. The company also plans to continue exploration in Uganda, Ghana, Ivory Coast, and Tanzania and Kenya in East Africa, according to a statement today.

    “We now have an extensive exploration campaign where we are looking to open new basins where we see exciting prospects,” Springett said in a phone interview. “A number of these wells are targeting very substantial resources.”

    Tullow plans to invest at least $500 million to drill about 40 exploration and appraisal wells this year, he said. The company will increase production 58 percent to as much as 92,000 barrels of oil equivalent a day this year after starting output at the Jubilee field in Ghana in November.

    The new forecast “is a little bit lower” than the previous guidance of 95,000 barrels a day, partly because the ramp-up of output from Jubilee is likely to take up to six months, Springett said. The field is currently pumping 50,000 barrels of oil a day and will reach 120,000 barrels later this year, Tullow said.

    Stock Performance

    Tullow gained 5 pence to 1,351 pence in London. The stock is up more than 16 percent in the past 12 months.

    “The leverage to the drill bit could see the shares exceed 20 pounds,” Richard Griffith, a London-based analyst at Evolution Securities Ltd., wrote in an e-mailed report. The wells in South America may open “up a new play in which Tullow has significant acreage.”

    Tullow said a general election planned on Feb. 18 in Uganda may delay the start of a venture with China National Offshore Oil Corp. and Total SA to tap fields in the Lake Albert basin. The partners are progressing talks with Uganda on the development, which may pump more than 200,000 barrels of oil a day in 2015.

    “The new partnership of Tullow, Cnooc and Total remains fully committed and looks forward to commencing the basin-wide development this year,” Chief Executive Officer Aidan Heavey said.

    Tullow paid about $1.5 billion in July to Heritage Oil Plc for interests in Block 1 and 3A in the Lake Albert basin. Uganda has delayed final approval of the deal amid a tax dispute, an issue that needs to be resolved before Cnooc and Total can be brought in as partners.

    ‘Minor Delay’

    There is “some minor delay” in the Kasamene and Nzizi development projects, which are now scheduled to pump first oil and gas in 2012, Springett said. “We are close to resolution” with the Ugandan government.

    Tullow plans to increase capital spending to about $1.5 billion in 2011 from $1.2 billion last year.

    Exploration write-offs for 2010 are expected to be $135 million, the explorer said. “This write-off is principally associated with unsuccessful 2010 exploration activities in Gabon, Tanzania, Ghana, new ventures activity and license relinquishments,” the company said.

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