A number of mid-size oil and gas explorers reported interim results this week. How did they do?
It's been a busy week for oily results this week, with a number of oil and gas explorers reporting interims.
Tullow
On Wednesday, we saw figures for the six months from Africa-based Tullow Oil (LSE: TLW), and they're looking pretty good. On turnover that rose from $439m in the first half of 2009 to $486m this time, Tullow made an impressive operating profit of $124m, which is a gain of 35%. Bottom line basic earnings per share of 9.4c, up 134%, were reported.
This impressive performance came despite the actual amount of oil that Tullow pumped falling by 6%, and was largely due to increased prices.
However, this is all pretty much small change, and although Tullow's drilling in Uganda is currently on hold, as the Ugandan government has frozen all activity in its tax dispute with Heritage Oil (a dispute that doesn't actually involve Tullow), the real profits are expected to start flowing next year, along with oil from Tullow's oil fields in Ghana.
Tullow is looking at increased production in the short term, saying "The outlook for the remainder of 2010 and the coming years is positive for Tullow. The Jubilee development is on track for first oil in the second half of 2010 and good progress is being made in Uganda towards development and production of the significant discovered resources".
With profits expected to grow threefold in 2011, and with hopes for more to come, it's perhaps no surprise that Tullow shares are on a forward P/E of over 35 for 2011.
Premier
Premier Oil (LSE: PMO), with operations mainly in the North Sea, the Middle East, and Asia, released its interim report on Thursday, and revealed that production was up 17% on the first half of 2009, to 46,600 barrels per day, and is on track to meet target of 75,000 barrels per day by 2012.
Profits in 2009 were way down on previous years, but the first half of 2010 saw Premier bouncing back with a pre-tax profit of $112m (from just $19m in the first six months of 2009). Operating cash flow nearly doubled to $221m, from $113m last year.
Basic earnings per share came in at 53.6c, from a first half loss of 26.7c per share last year.
With new production coming on line, chief executive Simon Lockett is expecting production in the medium term to exceed 2012's target, saying:
"We were delighted to be part of the Catcher discoveries, which have been added to our growing portfolio of future developments. These developments have the potential to take production levels to 100,000 barrels per day in the medium-term."
Soco
Thursday also brought us interim figures from Soco International (LSE: SIA). Soco, with fields in Vietnam, Thailand and several African countries, saw production fall by more than 20% as output was hit by repair work at its interests in Vietnam. A scaling back of production in Thailand also contributed, as the company plans to dispose of its Thai assets, selling them to Salamander Energy for $105m.
Despite the fall in production, higher prices led to Soco's six-month turnover increasing slightly, from $66.2m to $66.6m, though operating profit did fall from $44m to $31m, a decline of 30%.
However, considerably greater production is expected in the future, as the company told us that:
"There is no question that the drilling programmes currently underway offer more upside potential than any experienced previously by the Company. Should we have success in all phases, the Group could expect net reserves to more than quadruple. Even with modest success, there could be a significant impact on reserves."
Amongst its other hopefuls, Soco is aiming for reserves of 100m barrels from one of its wells in Vietnam, and 600m barrels from three wells in the Democratic Republic of Congo.
The shares perked up by 3% on the results, and the hoped-for potential, if tapped, could make Soco's current prospective 2011 full year P/E of 16 look cheap.
Do you follow these oil explorers? If so, please do tell us what you think below, or on our dedicated discussion boards for Tullow, Premier and Soco.
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