Tullow Oil (LSE: TLW) sees sales and profits rise, as it looks towards to a bumper second half.
Tullow Oil (LSE: TLW) has been one of the energy industry's big success stories over the last decade, which has seen its shares rise from around £1 to over £15 at their peak.
This morning's interim results saw sales rise by 10% to $1,167m and profit before tax leap 48% to $829m. The token interim dividend was maintained at 4p per share.
The leap in profits was largely due to one-off gains arising from a farm in of its Ugandan assets by Total (NYSE: TOT.US) and CNOOC (NYSE: CEO.US). The $2.9bn provided by these two companies, in return for a two-thirds stake, meant that Tullow's net debt has tumbled from $2,609m to $695m over the last 12 months. This should give it much more firepower for new exploration projects -- and it has plenty of those.
Tullow boasted a enviable success rate of 17 out of 22 on wells drilled in the first half of the year. The next six months look set to be equally busy. For all of 2012, Tullow aims to spend $730m out of its $2bn capital expenditure budget on exploration activities.
On the production front, 77,400 barrels of oil equivalent was the average daily rate for the first half of the year, up 3% on last year. The majority of Tullow's production now comes from Africa, and this continent will be increasingly important going forward, although the UK, Netherlands and Bangladesh all currently chip in, too.
For the full year, an average daily production rate of 80,000 to 84,000 barrels is expected, with the run rate potentially hitting 90,000 by the year end.
Aiden Heavey, Tullow's CEO, commented:
"Our exploration-led growth strategy continues to yield an exceptional success ratio and Tullow has, with the discovery of oil onshore Kenya, opened up a fourth new basin within five years. Our balance sheet has been transformed by the Uganda farm-down and our financial strength will continue to improve through growing production, as Jubilee fulfils its potential. A strong pipeline of activity in the second half of 2012 promises another excellent year for the Group."
Tullow's shares slipped 2% to 1,345p this morning, valuing the company at £12.2bn.
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> Stuart does not own any of the shares listed above.