The project to develop Uganda's Lake Albert basin has been delayed for years and has weighed on Tullow's share price; in the meantime, a project to develop Kenya's South Lockichar basin, which was discovered five years after the oil finds in Uganda, has moved forward.
News of the exploration success came as the company reported a 70% drop in full-year net profit, in line with guidance, after taking a $697M charge related to unsuccessful exploration in 2013 and in previous years.
Production in 2013 averaged 84.2K boe/day vs. 79.2K boe/day in the prior year; Tullow forecasts output of 79K-85K boe/day for this year.
In 2014, Tullow plans to invest ~$1B in exploration and appraisal with major campaigns in Mauritania, Norway, Kenya and Ethiopia and a first well offshore Guinea.
Uganda's government signs a long awaited deal with foreign oil companies to develop its oil sector, bringing to an end several years of talks and opening the way for development of the country's crude oil reserves.
The deal is based on a memorandum of understanding with Tullow Oil (TUWLF, TUWOY), Total (TOT) and Cnooc (CEO) cooperating on plans to develop the country's oil sector; the plans include a 60K bbl/day oil refinery, an oil export pipeline to Kenya's northern port of Lamu and a crude-fired electricity plant in Uganda's oil region.
An expected $15B-$17B in new investment will go toward development of up to 20 oil fields and put in place oil production infrastructure, including pipelines, processing facilities and power plants, officials say.
Uganda reaches agreement with China's Cnooc (CEO), France's Total (TOT), and the U.K.'s Tullow Oil (TUWLF, TUWOY) to develop its oil sector, the country's energy and minerals minister says, ending a nearly three-year impasse and opening the way for a $15B investment.
The plan consists of a 60K bbl/day refinery, a crude export pipeline to Kenya's northern port of Lamu and a crude-fired electricity plant in Uganda's oil region.
Uganda contains sub-Sahara Africa's fourth-largest amount of oil reserves, behind South Sudan, Angola and Nigeria.
Kosmos Energy (KOS -6%) sinks after Tullow Oil (TUWLF, TUWOY), KOS's partner in the Jubilee field offshore Ghana, said production would average 100K bbl/day of oil, below expectations.
KOS's net interest in the field's 2014 production is ~24.1K bbl/day, similar to 2013 levels; as a result, KOS expects to sell eight crude oil cargoes during 2014.
KOS says the revised forecast primarily stems from the recently completed third gas injection well, which started up in Q4 and provided minimal relief; reservoir performance and well productivity remain strong.
Tullow Oil (TUWLF, TUWOY) says it will plug and abandon the Tultule-1 wildcat well in the South Omo block in Ethiopia as a dry hole.
The well reached a total depth of 2,101 meters and was targeting a reservoir section similar to the sands drilled in the nearby Sabisa-1 well, where oil shows were encountered, but these sands were not penetrated in Tultule-1.
Agete-1 is Tullow’s fifth consecutive oil discovery in the region and follows Ekales-1, which encountered net oil pay measuring 60-100 meters in September.
The find should build on confidence that Tullow’s acreage will contain very material oil resources, analysts say, which should stand the company in good stead for making further discoveries during the intensive 2014 drilling campaign.
Tullow said last week that the process to sell down part of its 47% stake in TEN was progressing well and that bids were expected later this month; Tullow wants to sell a 17%-20% stake, which could fetch ~$600M.
A successful sale would free up Tullow to focus on further projects in Africa, where it has several exploration campaigns under way.
Tullow's other partners in the project include Kosmos Energy (KOS) and Anadarko Petroleum (APC).
Royal Dutch Shell (RDS.A, RDS.B) comes up dry with its final well in a four-well exploration program on the Guyane Maritime permit off French Guiana, and will plug and abandon it.
Partner Wessex Exploration says the well had reached a total depth of 6,460 meters and, while it intersected the reservoir sequences expected, no evidence of hydrocarbons was found.
All four wells in the program came up dry despite initially promising signs from a 2011 well in which Tullow Oil was the operator; Tullow (TUWLF, TUWOY) still owns a 27.5% stake in the permit, while current operator Shell owns 45%.
Tullow Oil (TUWLF, TUWOY) says it expects bids later this month for the sale of part of its 47% stake in the $5B Tweneboa-Enyenra-Ntomme oil project offshore Ghana, as the company seeks to focus more on exploration and limit its development costs.
Meanwhile, Tullow is rethinking plans to sell off gas assets in the North Sea after failing to attract sufficiently high offers.
Tullow Oil's (TUWLF, TUWOY) suspension of drilling in Kenya after weekend protests shows how popular impatience for a share of the spoils is compounding the problems energy firms face building an oil and gas industry from scratch in east Africa.
While the suspension is a blow to Kenya's government, investor confidence is another casualty; while east Africa is new hot new spot for oil and gas exploration, excitement has been tempered by wrangles with governments, gaps in regulations and rickety infrastructure.
Local populations are understandably anxious for a windfall, but production may be years away, and such disruptions are more likely to slow the area's emergence as a significant producer, a Reuters analysis says.
Total (TOT) says it has resumed oil exploration activities in northern Uganda's Lake Albertine rift basin, a month after suspending operations in the formerly war-ravaged region following the discovery of unexploded ammunition.
TOT, which jointly owns block 1 in the oil-rich basin with Tullow Oil (TUWLF, TUWOY) and Cnooc (CEO), suspended operations in September after company workers discovered the ammunition at two separate locations.
Clashes between rival tribes along Uganda's northeastern border with Kenya have killed at least 12 people, as hostilities escalate near Kenya's oil-rich Turkan Rift Basin.
The increased tensions is a concern for oil companies as they start exploiting the region's crude reserves; France's Total (TOT), China's Cnooc (CEO) and the U.K.'s Tullow Oil (TUWLF.PK, TUWOY.PK) are among companies invested in the region.
Analysts say insecurity along a proposed pipeline route linking oil fields in landlocked Uganda and South Sudan to Kenya's port of Lamu on the Indian Ocean is a major threat to the development of the region's oil industry.
A lead investor will be named by April and will take an interest of as much as 60% in the facility, which is proposed to have capacity of 60K bbl/day, according to the country's energy ministry.
The tender comes two weeks after Uganda issued its first oil production license to China's Cnooc (CEO), which in the process of developing Uganda's Lake Albertine fields together with Tullow Oil (TUWLF.PK, TUWOY.PK) and Total (TOT).