Tullow Provides Half-Yearly Results of 2012 for Ghana

Tullow Oil plc (Tullow), the independent oil and gas exploration and production Group, announces its half-yearly results for the six months ended 30 June 2012. Tullow had an excellent first half. The Group’s strong financial performance was mainly driven by increased production, sustained high commodity prices and the profit on the Uganda farm down. This was partially offset by increased exploration write-offs and increased costs. Industry-leading exploration and appraisal success continued, including the discovery of a fourth new oil basin in five years. A programme of acid stimulations is increasing production on the Jubilee field, offshore Ghana, and together with Phase 1A development, is expected to deliver plateau production next year. In Uganda, the completion of the farm-down has been followed by a ramp up in drilling activity and progression of the Development Plan.

Commenting, Aidan Heavey, Chief Executive, said:

“In the first half of 2012 we continued to build on the record results achieved in 2011. Our exploration-led growth strategy continues to yield an exceptional success ratio and Tullow has, with the discovery of oil onshore Kenya, opened up a fourth new basin within five years. Our balance sheet has been transformed by the Uganda farm-down and our financial strength will continue to improve through growing production, as Jubilee fulfils its potential. A strong pipeline of activity in the second half of 2012 promises another excellent year for the Group.”

Operations Review
West and North Africa

Tullow’s African production comes from Ghana, Equatorial Guinea, Gabon, Cote d’Ivoire, Congo (Brazzaville) and Mauritania. Whilst the main development and operating focus is on the Jubilee and TEN projects offshore Ghana, Tullow has significant ongoing development activities in the majority of its operational areas. The Group also has high-impact exploration acreage across this region in Mauritania, Senegal, Liberia, Sierra Leone, Cote d’Ivoire and Ghana.

Ghana
Jubilee field phase 1 and 1A developments

Since the start-up of production at the end of 2010, the Jubilee field has produced over 37 million barrels of oil and 38 oil cargoes have been safely exported. The FPSO continues to deliver world-class operational and safety performance with zero lost time incidents since first oil and 98% uptime. Gross field production averaged 63,100 bopd in the first half of 2012. Field production through the year has been variable as wells are taken offline for acid stimulation work and one well is currently offline. However, total field production capacity is now in excess of 80,000 bopd gross.

A programme of work to enhance production from the Jubilee wells commenced at the start of 2012. This programme has been successful and has identified acid stimulation as the optimum solution to returning the wells to their original productivity. Four wells have been successfully treated and up to three more treatments are planned for the remainder of this year.

Following Government approval at the beginning of 2012, the Phase 1A development project is progressing as planned. Two of the production wells and one of the injector wells have already been successfully drilled with net pay and reservoir quality in line with expectations. Phase 1A drilling operations on the remaining production and injection wells will continue throughout the second half of 2012. First production from the first Phase 1A well is expected in the second half of 2012.

Upon completion of the acidisation programme, and as new Phase 1A wells are brought onstream, significant increases in Jubilee production rates are expected. Gross average production from the field is forecast to average 70,000 to 80,000 bopd in 2012 and by the year-end gross production is expected to be in excess of 90,000 bopd, with ramp up to plateau production in 2013.

TEN appraisal and development

In the first half of 2012, the appraisal drilling and well testing for the TEN project made good progress with three wells drilled in support of the Plan of Development (PoD). The Owo-1RA well was drilled and successfully tested in February 2012 at combined rates of 20,000 bopd. Enyenra-4A was drilled in March 2012, intersecting 32 metres of oil pay. Water injection tests on this down-dip well were carried out in April 2012 with results proving that the Enyenra channel sands are suitable for water injection to support oil production.

The Ntomme-2A well was drilled in May 2012 and found oil down dip of the Tweneboa-3ST gas discovery (the Ntomme discovery well). The well was production tested at combined flow rates of around 20,000 bopd confirming excellent quality reservoir. As part of the overall appraisal programme pressure gauges were installed in a number of the wells and gauge readings have confirmed reservoir continuity across each of the individual Tweneboa, Enyenra and Ntomme fields.

The data from the appraisal activity in the first half of 2012 has enabled the subsurface models for the Tweneboa, Enyenra and Ntomme fields to be updated and the combined resources range is 200 to 600 mmboe with most likely resources of 360 mmboe of which 70% is oil.

The TEN project activities have made substantial progress during the year. The FPSO design competition has been completed and this work has moved to the optimisation phase with two contractors. The subsea FEED has also been completed and associated tendering is now under way. The development is being designed with sufficient flexibility to allow the upside TEN resources and significant nearby exploration upside to be tied in and produced through the FPSO. The work is now being finalised in preparation for the plan of development (PoD) which is on track to be submitted to the Minister of Energy during the third quarter of 2012.

Ghana Exploration and Appraisal

Exploration drilling activity is ongoing in the Deepwater Tano licence in advance of the licence expiry at the end of January 2013. The first of three wells, Wawa-1, completed drilling in early July 2012 and results of drilling, wireline logging and sampling show that the well has intersected 20 metres of gas-condensate pay and 13 metres of oil pay in turbidite sands. The well was drilled 10 km north of the Enyenra-3A well, testing the previously undrilled, updip portion of the licence. Pressure data shows that it is a separate accumulation from the TEN fields. Following the completion of Wawa-1, the Okure-1 and Sapele-1 exploration wells will be drilled.

In the West Cape Three Points licence, the Teak-4 appraisal well encountered thin non-commercial reservoirs and has been plugged and abandoned. The resources for the Mahogany, Akasa, Banda and Teak discoveries are currently being reviewed by the operator in advance of further appraisal work required to determine the optimal development plan for these discoveries.