Daily Telegraph (UK): Lock in gains at Tullow Oil: “After warning in September that Britain faces a winter of blackouts caused by low gas supplies, Aidan Heavey, the chirpy Irish chief executive of Tullow Oil, decided to make some money from it. Yesterday, he snapped up over 1.1 trillion cubic feet of gas reserves in the North Sea, 28 kilometres off the coast of Lincolnshire, for £200m from Shell and Exxon. (ShellNews.net) 21 Dec 04
The Questor column
Edited by Philip Aldrick (Filed: 21/12/2004)
After warning in September that Britain faces a winter of blackouts caused by low gas supplies, Aidan Heavey, the chirpy Irish chief executive of Tullow Oil, decided to make some money from it.
Yesterday, he snapped up over 1.1 trillion cubic feet of gas reserves in the North Sea, 28 kilometres off the coast of Lincolnshire, for £200m from Shell and Exxon.
The shares jumped largely because the deal is a bet on gas prices in 2006, when prices are set to surge as UK demand continues to outstrip local supply.
The deal means that Tullow, which is meant to be an oil and gas minnow, has spent nearly $1billion in the past year (the other big deal was the $570m acquisition of Energy Africa).
The only worry is that there could be technical concerns arising from the fields. If so, Tullow which owns some assets nearby is well placed to deal with them.
Also don't panic about management stretch – the management are not facing the kind of learning curve it faced in Africa because of its familiarity with the region.
Tullow has had a pretty good 2004 – and Questor readers have been along for the ride. If you took our recommendation to buy at 86½p in May, you are sitting on a 73pc profit at last night's close of 150p, up 5½p on the day. Tullow's shares yield 1pc and trade on 12.6 times 2005 earnings.
They could go further, depending on the oil price and exploration success – neither of which is certain.
It is probably time to lock in some of those profits.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2004/12/21/cxquest21.xml