Tullow Oil looks ahead to key developments in Ghana and Uganda in H2

In an trading statement for the first half, Tullow Oil (LON:TLW) said it expects to produce between 56,000 and 57,000 barrels of oil equivalent per day (boepd) through FY2010. In H2, the company expects the Jubilee Phase 1 development in Ghana to produce first oil, and a high-impact drilling programme is scheduled - with key wells in Ghana and Uganda already underway.

Furthermore, Tullow said that the approval from the government of Uganda, for Tullow’s acquisition of the Heritage Oil & Gas (LON:HOIL) assets, is expected imminently.

In H1 2010, Tullow produced an average of 55,800boepd, in line with market guidance, and reported sales volumes averaging 42,600boepd in the first half of 2010. The company noted that the difference between production and sales volumes relates to variations in lifting schedules, and are due to the terms of its Production Sharing Contracts (PSCs).
In terms of development, Tullow has a number of key projects for the remainder of 2010: The Jubilee Phase 1 development project offshore Ghana; A joint venture to develop the Lake Albert Rift Basin in Uganda; a high-impact exploration program – including the Deepwater Tano licence, the Tweneboa appraisal programme and at the West Cape Three Points block in Ghana, as well as Nsoga and Ngiri in Uganda.

Elsewhere, during the rest of the year, Tullow will carry out drilling work in Uganda, Ghana, Sierra Leone, Liberia, Mauritania, French Guiana, Guyana, Suriname, Gabon, Netherlands and Pakistan. In the statement, the company highlightrd the seven “potentially transformational” exploration wells in Sierra Leone (2), Liberia (1), Mauritania (2), Guyana (1) and French Guiana (1).

In reference to its development work in Ghana, Tullow highlighted that the 'Kwame Nkrumah' FPSO (Floating Production, Storage and Offloading vessel) is now moored on station - ahead of its deployment for the Jubilee Phase 1 development. The company completed the drilling operations of the Phase 1 wells in the first quarter of 2010, with more complex well completion operations following.

The FPSO and subsea system will be integrated, commissioned and tested in advance of first oil production, which is scheduled to begin during November or December 2010. “Production capacity at start-up is expected to be approximately 60,000 barrels of oil per day and will ramp up to 120,000 barrels per day over the following 3 to 6 months."

In Uganda, once the Heritage Oil transaction is complete, Tullow plans to enter into a partnership with CNOOC (China National Offshore Oil Corporation) and Total (NYSE:TOT) to farm down two thirds of its interests in Blocks 1, 2 and 3A in the Lake Albert Rift Basin.

The partnership intends to accelerate the development of the basin, and turn Uganda into a significant oil producing nation. Subsequently, the partnership will prepare an accelerated basin-wide development plan, which is expected to deliver in excess of 200,000bopd by around 2014/15.

"It has been a very good first half for Tullow. The recent arrival of the FPSO in Ghana represents the delivery of another major milestone ahead of first oil. The Heritage pre-emption in Uganda is now very close to finalisation and we look forward to working with our new partners, CNOOC and Total, to put together a development plan for the Lake Albert Rift basin”, Tullow chief executive Aidan Heavey commented.

“In addition, we continue to drill a number of high-impact exploration wells as we look to open new hydrocarbon basins to continue the company's growth," he added.