Tullow Oil spills £400million thanks to drilling setbacks in West Africa
MORE than £400million was wiped from the value of Tullow Oil yesterday as it failed to strike black gold in commercial quantities at a key prospect in West Africa.
The £7billion company, one of the UK’s biggest quoted explorers, has lost over one third of its market value over the past year after a string of disappointing updates in Mozambique, Ethiopia and French Guiana.
The latest setback came from off the coast of Mauritania, where its Fregate-1 well encountered 30 metres of gas condensate and oil but was not a commercial find. Tullow’s shares fell 53p to 792½p.
Tullow said the well had achieved “an important technical breakthrough”, but while “encouraging, further assessment and analysis will be required before follow up activities”.
CanaccordGenuity analyst Thomas Martin said: “We had hoped for a commercial discovery here. The Fregate well is likely to have been costly, having started drilling last August.”
Tullow posted an annual operating profit of £230million, down 68 per cent on the previous year but ahead of consensus forecasts of about £212million. Sales revenue was up 13 per cent at £1.6billion.
Chief executive Aidan Heavey said the group had made “significant progress” with key developments in Ghana, Kenya and Uganda, which will deliver a big increase in cash flow over the next 3-5 years.
