Oil rig used by Tullow, offshore Ghana, West Africa.

Oil exploration company Tullow, which is listed in London, said in a trading statement today that its total revenue for the first half of 2009 is expected to be about £290m sterling. This compares with £378m reported in the first half of 2008, when the price of oil was heading to a record high.

In the statement, the company said the reduction was due to lower sales volumes and the more importantly, the reduction in world commodity prices during the first half of this year.

Tullow said its group working interest production for the first six months of 2009 average 59,000 boepd (barrels of oil equivalent per day), 16% lower than the same time last year. It said that group production for 2009 is now expected to average 58,000. It said this forecast has been impacted by mixed results from infill wells in the UK, partly offset by higher production in Africa.

Tullow's African interests are in Ghana, Cote d'Ivoire, Liberia, Uganda, Congo, Equatorial Guinea, Gabon, Mauritania, Namibia, Senegal, Angola, Tanzania and Madagascar. It said its portfolio there has continued to perform strongly in the first half of 2009.

Significant discoveries were made in both Ghana and Uganda and "excellent" progress as been made on the Jubilee Phase 1 development project in Ghana. Production was in line with expectations and averaged 38,500 boepd.

Tullow's interests in Europe are in the Southern Gas Basin of the UK North Sea. It also has offshore exploration interests in the Netherlands and Portugal. In the first six months of the year, net production from the UK averaged 15,100 boepd.

Goodbody analyst Gerry Hennigan commented: "Broadly as expected, much of the focus within the H1 trading statement, was on recent drilling results, forthcoming activity for the remainder of the year, and new ventures, specifically new acreage added. Of particular note, in that regard is the fact that while “a few metres of oil shows have been encountered” at the top of the main Ngassa target, further drilling has been suspended due to operational difficulties, with target depth not now expected to be reached until August.

 The latest result from the Butiaba campaign (Wahrindi-1) yielded four meters of net oil pay, with a final prospect (Ngara-1) to be drilled in Block 2 (Tullow 100%) before the rig moves to Block 1 (Tullow 50%). The additional acreage added involves two new licences off the coast of Liberia. It is noteworthy that exploration activity off the coast of Liberia and Cote D’Ivoire has assumed greater priority, with a well (South Grand Lahou) due to be drilled in the latter in Q3. The accelerated pace of activity in both regions is based on seismic data, which holds out the potential for prospects analogous to those encountered offshore Ghana.

On the operational front, also as expected, the trend is one of slightly lower production and higher capex (capital expenditure), with a resultant impact on net debt. Average production for H1 is expected to be of the order of 59.0 kbopd, with the average for the year now targeted at 58.0 kbopd (down from 60.0 kbopd in March). Combined with marginally lower realised prices (more so on the gas side), revenue for the first half is expected to be £290m against our forecast of £316.9m.

 Capex guidance for the year is now expected to be in the order of £700m, up from £600m in March, though the run rate in H1 (£425m) may point to upside to this number. Net debt at the end of June was given as £425m compared to our forecast of £146.4m. On balance, while the operational detail in terms of current production continues to slide, with Jubilee still on track for first production in H210 and no sign of exploration prospectivity diminishing, the market is again likely to take any production shortcomings in its stride."