- Shares gain as much as 18%, most in more than four years
- Kosmos says TEN project set for first oil in third quarter
Tullow Oil Plc gained the most in four years after the African oil explorer’s partner in an offshore project in Ghana said the two companies remained on course to start production in the third quarter of 2016.
The Tweneboa, Enyenra and Ntomme, or TEN, project is 75 percent complete and remains on budget, Kosmos Energy Ltd. said in a statement on Monday. Figures from Kosmos also showed good production from Ghana’s Jubilee offshore field, which is operated by Tullow, FirstEnergy Capital said in a note.
Shares of Tullow gained as much as 18 percent, the biggest intraday increase since Sept. 9, 2011, and were trading 16 percent higher at 232.9 pence at 3:51 p.m. in London. That pared this year’s decline to 44 percent after the stock fell 50 percent in the third quarter as oil slumped to a six-year low.
Tullow, which has made some of Africa’s largest oil discoveries in the past 10 years, plans to start TEN in mid-2016 and ramp up output by the end of the year. The project requires the drilling and completion of as many as 24 development wells that will be connected through subsea infrastructure to a floating, production, storage and offloading vessel, or FPSO, moored in approximately 1,500 meters (4,921 feet) of water.
The vessel is being commissioned and should arrive in Ghana by the end of February, Chief Executive Officer Aidan Heavey said in an Oct. 27 interview. The explorer has staved off trouble by acting fast in the downturn, he said.
“Do it quick, do whatever needs to be done and maximize the value of the core assets that you have,” the CEO said.
While Tullow slashed its exploration budget to $200 million this year, that could double in the future, according to Heavey. The company received a boost last month after maintaining credit lines with banks.
A pick up in activity “won’t be instant because if oil prices pick up, what we want to do is reduce some of our debt,” the CEO said. “So we’re going to use the revenue from TEN because TEN is the one that built up our debt.”