Tullow Oil shares closed up 2.82 per cent to 204.50p today, after the Africa-focused oil explorer’s first half results smashed expectations.
The FTSE 250-listed firm beat expectations for a $196m loss with a net profit of $30m (£23m), up from a loss of $68m last year.
This Africa-focused oil explorer's pre-tax profit rose to $24m from a loss of $10m.
Revenue fell 34 per cent to $541m during this period, from $820m in the first half of 2015. This was due to lower commodity prices, as well as reduced production at its flagship Jubilee oil field in Ghana.
Its troublesome debt pile continued to rise, swelling by nearly a third to $4.7bn.
Why it's interesting:
Tullow made a profit despite production falling 22 per cent to 58,400 barrels of oil per day, while the price at which it sold oil slipped 16 per cent to $60.7 per barrel. But this was partially offset by last year's cost cuts which began to pay off, less spending on administration and smaller write-offs.
It confirmed that its TEN project remains on track to deliver first oil in early August, and will eventually boost its net production by 60 per cent. The company has said it will use the additional cash to whittle down its debt.
Like many of its peers, Tullow has suffered amid low oil prices, and is scrambling to shore up its balance sheet. The oil explorer recently announced a $300m bond auction, just months after it agreed a $3.5bn loan deal.
What Tullow said:
Aidan Heavey, Tullow Oil's chief executive, said: "The start of production from the TEN field in early August will be transformational for the group allowing us to significantly increase our net production and begin the process of deleveraging our balance sheet."
"The benefits of last year's cost-cutting programme are evident in the financial results, the significant TEN capital expenditure is largely behind us and we have also made good progress on the Jubilee Turret Project."
What the analysts said:
Liberum said: "Tullow's first half results are slightly better than expected mainly due to lower admin costs, the absence of any impairment of PPE and a favourable working capital movement. There appear few new operational developments with TEN starting in August, and, ahead of the presentation, we do not expect significant changes to valuation."
FirstEnergy Global Research said: "The small additional 2017 Jubilee opex is likely to be absorbed by the insurance. We continue liking Tullow at current levels."