Shares in Tullow climb 11% today
Shares in oil and gas exploration group Tullow Oil today climbed more than 11% after it unveiled plans to buy a bigger South African-based counterpart.
Stock in London-based Tullow jumped 9.75p to 96.25p after it announced the proposed acquisition of Energy Africa for $570m (€472m).
Tullow said it believed the buy, which is expected roughly to double its size in oil and natural gas production, would be a company-transforming deal.
It will significantly increase the FTSE 250-listed firm’s interests in west Africa, where it is already active in Cote d’Ivoire, Gabon and Cameroon.
As well as those three states, the company has operations in the North Sea, Pakistan, Bangladesh, India and Romania.
Cape Town-based Energy Africa has interests in nine countries including Congo, Egypt, Equatorial Guinea, Gabon, Mauritania, Morocco, Namibia, Senegal and Uganda.
Tullow was founded in 1985 and currently produces about 25,000 barrels of oil equivalent per day (boepd), most of which is gas.
The acquisition will give it annual operating cash flow of about €250m and combined production of 54,000 boepd, the group said.
It added that it would give it an almost equal balance between oil and gas production and a wider and more extensive range of active exploration and development programmes.
West Africa and the North Sea presented the main growth opportunities in the sector, the group said.
Tullow chief executive Aidan Heavey said: “The proposed acquisition of Energy Africa by Tullow will create a formidable independent oil and gas company with core areas in West Africa and the UK.”
The $570m price tag includes the purchase from African Petroleum Investment Ltd (APIL) of its 50% stake in EAGHL, a joint venture between Energy Africa and APIL.
Tullow also said today that turnover rose to a record £132.4m (€196.2m) in the year to December 31, 2003 driven by increased North Sea and West African production.
Operating profits before exploration activities increased 41% to £47.1m (€69.8m). Bottom line pre-tax profits rose to £26.6m (€39.4m).
