* Oil and gas explorer reports $95 million loss
* Write-offs of $402 million on dry holes in Africa, Norway
* Revenues, production fall
(Recasts, adds quotes, details)
By Ron Bousso
LONDON, July 30 Tullow Oil Plc drifted
into the red after writing off more than $400 million in
exploration costs but the Africa-focused explorer remained
confident that its strategy will pay off.
A disappointing run of oil wells exploration in Mauritania,
Ethiopia and Norway over the past six months translated into a
half-year net loss of $95 million because of $402 million in
The British energy company is counting on drilling projects
in Kenya and Ethiopia this year and next to improve its
"Exploration is a risky business... You have periods where
you don't find oil and if you keep at it over a period of three
to five years you generally have the success that we've had, so
we are not overly concerned," Chief Executive Aidan Heavey told
"Our basic strategy is to find around 200 million barrels of
oil a year and we've done that very successfully over the last
seven years and we are pretty confident we'll do it long term."
Tullow has had 14 successful well results and eight dry
holes so far this year, mostly in East Africa, exploration
director Angus McCoss said.
In Kenya, Tullow has made oil discoveries in 9 of 11 wells
in the Lokichar basin where it has raised discovered resources
to 600 million barrels of oil. It plans to drill wells in three
new onshore basins in the East African country.
"Kenya has a dozens basins and we've only really explored
one of them intensively so there is a lot of scope to repeat the
success that we've had in the South Lokichar Basin," McCoss
Oil discoveries in Uganda and Kenya and gas deposits found
off Tanzania and Mozambique have turned east Africa into a hot
spot for hydrocarbon exploration.
The governments of Kenya, Uganda and Rwanda have signed a
Memorandum of Understanding (MoU) in February on the
construction of a oil export pipeline from Uganda through Kenya.
Tullow reported a net loss of $95 million for the six months
ended June 30 compared with a net profit of $313 million a year
earlier. Revenues fell 6 percent to $1.265 billion.
It said production fell 12 percent in the first half to
78,400 barrels of oil equivalent per day (boepd), short of its
full-year production guidance of 79,000-85,000 boepd.
Tullow's shares traded 0.589 percent lower at 758.50 pence
on the London Stock Exchange by 0750 GMT.
Production at its flagship offshore Jubilee oil field in
Ghana averaged 103,000 barrels per day (bpd) in the first half
of 2014, slightly above the group's full-year production goal.
Tullow holds a 35.5 percent stake in the Jubilee field.
The TEN project in Ghana remained on course and on budget
for first production in 2016 with plans to reach 80,000 bpd
production capacity by 2017. Tullow said the project was now 30
percent complete and expected to cost $4.9 billion as it seeks
to sell it to a third-party.
Tullow started selling assets in Pakistan, Bangladesh and
the North Sea last year in order to boost profits and focus on
its core areas.
Analysts at RBC Capital maintained a neutral recommendation
on shares "underpinned by the steady, medium-term, delivery of
Tullow's developments in Ghana, Kenya and Uganda."
(Additional reporting by Roshni Menon in Bangalore; editing by