Tullow Oil (LON: TLW) Plans Record Well Number for 2013

Brian Hicks

Written By Brian Hicks

Posted January 14, 2013

Tullow Oil Plc (LON: TLW) is all set to dramatically increase the scale of its drilling operations.

The company has 49 wells scheduled to be drilled over this year. Its 2013 guidance, between 86,000-92,000 barrels of oil equivalent per day, is slightly below early analyses’ predictions. But bear in mind that last year, Tullow’s 79,200 boepd output also went below company guidance.

Tullow has had a good few years; shares have tripled overall since 2007, though they were down on Friday.

Reuters quotes company finance director Ian Springett on Tullow’s African prospects:

“We need to drill a lot more wells in Kenya before we really understand where are the best locations and what the flow rates are,” he said. “We have a very large exploration programme active in a number of countries with some basin opening potential in a number of them. It’s a big and wide programme.”

Tullow has been following an exploration-led growth strategy: it discovers oil and sells assets in that area fairly quickly. Recently, particularly after Tullow bought Norway’s Spring Energy in December of 2012, concerns have risen that the company needs to focus on balancing its exploration and production.

But Tullow has expressed confidence in its assets. It expects good results in Kenya and Ethiopia from the PaiPai-1 and Twiga-South-1 oil wells. And in Uganda, Tullow’s Riwu-1, Raa-1, and Til-1 wells are set for further exploratory drilling in collaboration with Total (NYSE: TOT) sometime this year. The company is also continuing to develop assets in French Guiana and in Ghana.

Last year, Tullow sold part of its Uganda franchise to Total and Chinese company CNOOC (NYSE: CEO), amassing $2.9 billion. The company is presently engaged in disposing of further assets to try and raise more capital.

Shares closed down 0.78 percent on Monday.

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