Tullow Shareholders Strike Gold

Aidan Heavey Chief Executive Officer of Tullow Oil plc.

Posted on: www.dailyguideghana.com

By William Yaw Owusu

Tuesday October 25, 2011.
Since the beginning of full-scale production at the Jubilee oilfield at the end of 2010, over 15 million barrels of oil have been produced and 15 oil cargoes safely exported as of June 2011.

The field is now producing around 85,000 barrels of oil per day (bopd) with over 75 million standard cubic feet (mmscfd) of gas being re-injected, according to the 2011 Half-yearly Report posted by Tullow Oil Plc.

While Tullow and other Jubilee partners are making profit, they’re not paying corporate taxes, according to the Civil Society Platform on Oil and Gas (CSO), a coalition of NGOs monitoring Ghana’s oil find in the Western region. The coalition is worried that the absent taxes will hold back development in the country.

Ghana Revenue Authority (GRA), a government agency mandated to collect revenue for development, says the oil companies aren’t making profits and so can’t pay taxes now. But Tullow’s mid-year report shows significant profit for the majority Jubilee partner.

Jubilee is shared by Tullow Oil plc (34.7%), Kosmos Energy (23.49%), Anadarko Petroleum (23.49%) and the Ghana National Petroleum Corporation (GNPC) (13.75%).

Tullow’s mid-year report, jointly endorsed by Aidan Heavey, Chief Executive Officer and Ian Springett, Chief Financial Officer said: “Tullow’s finances are being fundamentally changed in 2011 by increased production and cash flow from the Jubilee Oilfield.”

As a result, the Tullow board believes “it is appropriate to review Tullow’s dividend policy and has doubled the dividend for the half year to 4.0 pence per share (1H or 1H2010: 2.0 pence per share).”

According to the report, “the dividend will be paid on November 3, 2011 to shareholders on the register on 30 September 2011.”

The report said a total of 17 wells have been drilled of which 14 have been completed and brought on line, adding “this consists of eight oil production wells, five water injection wells and one gas injector well.”

It posited that the final production well is expected to be brought on stream this month, taking Jubilee oilfield production to 105,000 bopd.

Some of the key highlights of the report are the record sales revenue of over $1 billion driven by Jubilee production as well as 71 per cent exploration and appraisal success year-to-date (17/24), Akasa-1 discovery and the listing of the company on the Ghana Stock Exchange (GES) following a successful $72.3 million offer.

The report quoted Mr. Heavey as saying: “We have delivered a strong performance and achieved record results in the first half allowing us to double the dividend.”

Against this backdrop, CSO has raised red flags over the refusal or inability of Jubilee partners to honour their corporate tax obligations which would aid national development.

In the 2011 Supplementary Budget Statement for instance, the Ministry of Finance and Economic Planning posted that it was expecting GH¢ 603,764,335 from corporate taxes alone.

The Bank of Ghana also presented a good picture on the revenue front from oil as the Monetary Policy Committee (MPC) stated in its report for 2011 that the strong export growth continues to be driven by gold, cocoa beans and crude oil, adding that the total export of crude oil from January to September was US$1.97 billion.

Shockingly, when the CSO platform recently raised the concern through one of their lead researchers, Mohammed Amin Anta Adam about the non-payment of corporate taxes by the Jubilee partners, the GRA came out strongly to defend the partners by insisting that the oil firms were yet to make profit.

The coalition insisted that the government knew that the partners were making a profit and that was why it was able to make provisions in the 2011 Supplementary Budget.

The coalition warned that the Petroleum Funds will be in arrears if Ghana is unable to collect the taxes before the end of the year and it will adversely affect the development patterns of the country.

“It is important for full disclosures by the oil companies on how much revenues they are receiving and how much capital allowance is provided for them so that we can assess whether the companies are making profits contrary to the position of the GRA,” it added.