Tullow Oil moves into the black despite African setback

TULLOW Oil has delivered a surprise profit despite production issues at its West African fields and weak oil prices.

The mid-cap explorer was expected to report a post-tax loss of $196m (£150m), but made a $30m profit. Pretax profit totalled $24m, compared with a loss of $10m last year.

Tullow’s unexpected growth comes in spite of low oil prices and falling production. Prices averaged less than $40 a barrel in the first six months of the year, and dropped to less than $28 in January. In the same period last year, the average price of a barrel of oil was $56.

Tullow also suffered an extended shutdown of its Jubilee oilfield off the coast of Ghana in April. Production restarted in early May.

The oilfield produced 62,900 barrels of oil a day in the first half, but this is expected to reach 85,000 barrels a day in the second half of the year. Tullow is also due to begin production at its TEN oilfield off the coast of Ghana, next month.

Aidan Heavey, chief executive of Tullow, said the TEN field would be “transformational” as it would allow Tullow to increase production while cutting costs, and help it to tackle its $4.7bn debt pile.

“Tullow is therefore well placed to move forward with a restructured and more efficient business that can deliver growth from its portfolio of high quality, low cost producing, development and exploration assets,” Mr Heavey said.

Al Stanton, an analyst with RBC Capital, said the explorer was “turning a corner”, albeit with a few bumps on the way. “The share price drop below 200p has provided investors with an opportunity to buy stock in a portfolio that includes sizable stakes in world-class projects,” he said.

Tullow’s shares rose 3pc to close at 204.8p.