Shares in exploration group Tullow tumbled yesterday following a series of announcements that included a €287 million acquisition and results from two exploration ventures.
The group said yesterday it had agreed to buy Spring Energy Norway for $372 million (€287 million) and planned to sell its North Sea gas production assets as they no longer fitted with its oil exploration focus.
Tullow’s share price fell 8.44 per cent to 1,150 pence sterling by the close of business in London, where most of its stock is traded. It was off 7.45 per cent at €14.271 in Dublin.
Announcements detailing the latest results from two exploration ventures were behind the share price fall. The Irish group said it has walked away from its Georgetown licence off the coast of Guyana in South America. This includes the Jaguar-1 well drilled this year. Tullow encountered gas there, but not oil, which it was seeking. It is continuing to weigh up oil exploration opportunities in the South American country.
Tullow also said it had found uncommercial quantities of oil in an exploration well in its deepwater Tano licence off Ghana’s coast.
The well, Okure-1, is not connected to other discoveries in the area. Tullow has already submitted a development plan for the original Tano licence to Ghana’s government. The deepwater licence is not part of this. Elsewhere in Ghana, Tullow confirmed that production from its Jubilee field was on track to hit 100,000 barrels a day following work to deal with technical problems encountered there this year.
Net asset value
Davy analyst Job Langbroek reacted yesterday by cutting Tullow’s net asset value per share to 1,493 pence, which he said reflected the fact that the stockbroking firm valued both the Guyana licence and Okure-1 well at 12 pence per share each.
He made no change to account for the Spring deal on the basis that the firm needed more time to understand the assets that the company has bought.
“With some evidence that the rapid discovery pace offshore Ghana has slowed, it will be important for the group to show it is working hard to maintain a high-impact exploration-focused portfolio,” Mr Langbroek argued.
Spring holds 28 offshore licences in the North, Norwegian and Barents Seas. It has made six commercial discoveries from 12 exploration wells drilled since 2008. It has existing reserves of 24 million barrels of oil and prospective resources of 230 million. It plans to drill 16 further exploration wells over the next two years.
