LONDON -- The shares of Tullow Oil (LSE: TLW ) slid 37 pence, or 3%, to 1,188 pence during early London trade this morning after the oil group summarized its 2012 performance and outlined its plans for 2013.
Tullow said its revenue from last year would be in the order of $2.35 billion, or 2% higher than the level achieved during 2011. The company also confirmed production had averaged 79,000 barrels of oil a day during 2012, and added this year should witness production of between 86,000 and 92,000 barrels per day.
Furthermore, Tullow declared it carried net debt of $1 billion at the end of last year and revealed capital expenditure during 2012 had reached $1.9 billion. Expenditure for 2013 is forecast to be $2 billion, of which $0.9 billion is set to pay for the drilling of 40 wells throughout the group's African operations.
Tullow claimed the drilling program aimed to find around one billion barrels of oil.
Aidan Heavey, Tullow's chief executive, said:
Tullow accomplished much in 2012. We have had significant exploration success in establishing Kenya as a new hydrocarbon province and continued to add to and mature our exploration portfolio... Tullow is now well positioned for a very successful 2013 and growth beyond.
Prior to today, City experts that followed Tullow were expecting current-year earnings of about 50 pence per share and a dividend of around 12 pence per share. The projections equate to a P/E of 24 and a yield of 1%.
On the face of it, those ratings suggest a lot of Tullow's £11 billion market value is based on the oil reserves that may be extracted in the future, rather than those reserves that are already in production.
Still, Tullow's shares have surged 170-fold under the leadership of Aidan Heavey during the last 20 years or so. As such, it may pay to stick with one of the sector's most talented executives.
Of course, whether today's update, the current valuation and Mr Heavey's phenomenal share-price record combine to make Tullow a buy or a sell remains your decision.
Indeed, you may wish to consult this free Motley Fool report, which explains the factors you need to consider -- and the risks you might encounter -- when evaluating oil and gas explorers.
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