Tullow Oil launches £400m share placing

LONDON – UK-based oil explorer Tullow Oil said it was launching a share sale to raise about 400 million pounds (US$561,9 million) as it seeks to secure finance to develop big oil finds in the face of harsh debt markets.

Tullow Chief Executive Aidan Heavey said the company was also on track to seal a US$2 billion bank financing package in February.
However, after the sale of a stake in the M’Boundi oil field in the Republic of Congo to the Korean National Oil Company fell through, Tullow said it wants to remove any possible risk to its projects.
There’s been a lot of rumours in the market about fund raising and the need for fund-raising,’ Heavey told reporters on a conference call. ‘We want to make sure that the business is fully secured and can continue to accelerate its activities’.
The company said its average working interest production for 2009 was expected to be 60 000 barrels of oil equivalent per day.
Tullow shares had fallen three per cent to trade at 582 pence in the morning, under performing a 1,5 per cent fall in the DJ Stoxx European oil and gas sector index. Tullow shares lost about four per cent on Tuesday on rumours of the share sale.
A share placing to effectively make-good the funding shortfall arising on termination of M’Boundi sale should not derail the underlying Tullow equity story,’ Mark Bloomfield, oil analyst at Citigroup said in a research note.
Bloomfield said the 2009 production guidance may disappoint investors. The share placing will boost Tullow’s share capital by around 10 per cent.
Tullow said its Jubilee field in Ghana has a resource potential of up to 1,8 billion barrels and that recent oil finds in Uganda meant it had sufficient reserves to justify a full field development including an export pipeline across Kenya.
Heavey reiterated Tullow’s strategy remained to sell down part of its interests in Uganda but added that while it had received many approaches from potential buyers, it had decided not to engage in sale negotiations at the moment.
The finds in Ghana and Uganda contributed to a 500 per cent reserve replacement rate in 2008. -Nampa-Reuters