Tullow Oil share price: H1 sales sink by a third

Tullow Oil Plc (LON:TLW) today updated investors with results for the first half of the current financial year, revealing the impact of the 40 percent slump in oil prices since last year.

The Irish founded company reported sales revenue of $820 million (£526 million) in the six months through June 30, largely in line with consensus projections. The figures are also 35 percent below revenue in the first half of 2014.

The report shows gross profit has halved to $342 million, while operating profit was logged at $97 million, far exceeding last year’s write-off-hit $36 million but also falling short of analysts’ forecast of $160 million.

The company’s average realised oil price after hedging for the first half was $70.6 per barrel, down from $106.7.

“Our financial results for the first half of 2015 are in line with market expectations and reflect the re-setting of our business in response to the weaker oil price,” chief executive Aidan Heavey commented.

“Revenues are lower due to the fall in oil price and asset sales but our hedging programme offset some of the impact. Our underlying cash generation remains solid.”

The company has also wound down capital expenditures to $783 million, from $1.05 billion, and noted that full-year guidance remains at $1.9 billion, as compared with $2 billion for FY 2014.

Production-wise, the company maintained its full-year oil production guidance of 66,000-70,000 barrels of oil per day, though Jubilee output forecast was pared back to 100,000 bpd gross due to recent gas compression issues at the facility.

Significantly, the company said that the dividend remains suspended, as “the Board believes that Tullow and its shareholders are better served by investing these funds into the business”.

Tullow’s share price jumped as the market opened today, adding 1.85 percent to 241.59p as of 08:02 BST. The surge follows a string of poor sessions, however, which saw the company’s stock dipping to a 10-year low of 232.40p per share on Wednesday. The share price is down some 70 percent on an annual basis.

The other major London-listed energy companies are also reporting results this week.

BP reported yesterday that underlying upstream profits slumped on account of the depressed oil price, while the fresh impairments relating to the Deepwater Horizon settlement pushed the company deep into the red.

Shell is set to reveal results tomorrow, with analysts’ forecasts on the company’s adjusted profit ranging from $2 billion to $4 billion, the current consensus being $3.12 billion. These figures compare with $5.1 billion for the second quarter of last year, and with $4.8 billion for the first three months of 2015.

Smaller rival BG Group is due to release its report on Friday. Experts project that the company will report earnings of about $0.095 per share, as compared with $0.35 per share for the second quarter of 2014 and $0.16 for the first quarter of this year. Revenue is forecast at $3.5 billion, down from $5.5 billion in Q2 of 2014.
As of 08:39 BST, Wednesday, 29 July, Tullow Oil plc share price is 244.50p.