Tullow Oil - History

History

The Company was founded by Aidan Heavey in 1985 in Tullow in the Republic of Ireland as a gas exploration business operating in Senegal.

"It started in a small town called Tullow, about 35 miles south of Dublin, Ireland. In the 80s there were loads of companies starting off in the North Sea and Irish Celtic Sea. I was talking to a friend of mine in the bank one day and he was talking about small oil fields in Africa, which had been left behind by the majors and had no-one to work them. That is where the idea came from. I contacted another friend of mine in the World Bank who told me about a project in Senegal. They had some small gas fields that they were trying to get people to develop, so I setup Tullow Oil to rework those old fields. I knew nothing about the oil and gas industry at the time, which made it more challenging. No one thought Tullow would succeed because of my lack of knowledge of the industry, no major backers and I was starting a company in a country with no oil industry." (Aiden Heavey, CEO)

Following the signing of a licence agreement in Senegal in 1986, gas production and sales commenced in 1987. The same year Tullow listed its shares on the London Stock Exchange and Irish Stock Exchange - Tullow joined the FTSE 100 index in September 2007.

In 1988, Tullow expanded its operations into the UK by acquiring exploration acreage and proven gas fields. In 1989, Tullow was awarded its first onshore UK licence and acquired exploration acreage in Spain, Italy and South Yemen.

In 1990, Tullow signed its first license agreement in Pakistan, laying the foundations for the Group's South Asia portfolio of assets. Gas was discovered at the Sara field in Pakistan in 1994 and eventually brought on stream in 1999. New countries were added throughout the decade with licenses acquired in Bangladesh, India, Côte d'Ivoire, Egypt and Romania. Activities were relinquished in four countries during the period.

2000 saw the beginning of a period of an accelerated pace of activity for Tullow, starting with the announcement of a £201 million acquisition of producing gas fields and related infrastructure in the UK Southern North Sea from BP. This proved to be a catalyst for the Group's positioning as a leading player in the CMS and Thames/Hewett areas. In 2000, Tullow re-registered in the UK.

2001 to 2003 was the first defining and transformational period for the Group with the integration of its 2000 UK acquisition and growing production in core areas, as a result of re-investment in exploration and development activities. Strong increases in sales and profits were achieved and Tullow focused its financial resources and management attention on offshore UK, West Africa and South Asia.

The Group more than doubled in size in 2004, mainly as a result of the Energy Africa acquisition which was completed in May that year for $570m. Overall Tullow spent US$1 billion on acquisitions and investments in 2004, creating a strong portfolio of international exploration, production and development assets. The integration of Energy Africa progressed well and Tullow delivered a very good operational and financial performance in 2005. It had two UK North Sea gas discoveries, one discovery in Gabon and one in Mauritania.

In 2006, the company began drilling its first well in Uganda and has since drilled circa 50 wells around the Lake Albert region. There were five oil discoveries in Uganda during 2006, which established the existence of a working hydrocarbon basin and marked the beginning of proving up a world-class major new oil province there. Tullow also announced its largest acquisition ever with a US$1.1 billion bid for Hardman Resources Limited. This transaction became effective in December 2006 and completed in January 2007.

In 2007, Tullow drilled two deep water wells offshore Ghana discovering the massive Jubilee field – its largest ever discovery and the beginnings of proving up a second new major oil province. 2008–2009 was its next phase of growth with a major focus on Africa, based on delivering first oil in Ghana in 2010.

In February 2010, the oil firm initiated a “tax planning” exercise that was criticised by Heritage’s counsel during the Heritage / Tullow court case in 2013 as an attempt to reduce the amount of tax the firm was liable to pay in Uganda. Richard Inch, Head of Tax at Tullow, firmly rejected the criticism whilst giving evidence in this case.

In November 2010, the Jubilee field was brought on to production, in record time, some 40 months after its discovery. A new major discovery was also made at the Enyenra (Owo) and Tweneboa fields in Ghana during the year.

In 2011 the company bought into twenty five Dutch, North Sea Gas fields and in March 2012 a new oil reserve was discovered in Kenya.

In 2012 the company encountered non-commercial reservoirs at its Teak-4A well off Ghana leading to the well having to be plugged and abandoned.

Tullow completed the purchase of Heritage Oil’s licences in the Lake Albert area in 2010 for $1.45bn and on 21 February 2012 completed a farm down of two thirds of its interests to Total and CNOOC for US$2.9 billion. But Tullow and its partners have yet to reach agreement with the Government of Uganda over a plan to develop Lake Albert including a proposed refinery and export-pipeline.

In 2012 there were some production delays at the Jubilee field but the Company announced on 13 February 2013 that production issues at the Jubilee field had been successfully and cost-effectively remediated and that production was now at around 110,000 bopd with an expected 2013 year end exit rate of over 120,000 bopd.

The firm and its leadership were criticised in January 2013 after a decrease in its share price. This was reportedly because the company had failed to reach production targets at a project in Ghana because of ‘operational hiccups’. This prompted the broker Investec to rate the company a ‘sell’ and decrease its target price. Also causing problems were the oil fields known as the TEN that Tullow discovered off the coast of Ghana. The fields were a significant find but the projected development cost of the fields was estimated to exceed $5 billion, which is too much for a firm of Tullow’s size. The Company has suggested it may reduce its share in projects to help reduce the cost burden of developments.

In Uganda, Tullow and its partners (CNOCC and Total) continues to work with the government of Uganda on the development plan for Lake Albert which is to include a local refinery and international pipeline.