Tullow Joins Forces With Shell On Atlantic Exploration

Exploration firm Tullow Oil PLC (TLW.LN) said Wednesday it will team up with energy giant Royal Dutch Shell PLC (RDSA) to jointly explore for oil and gas at select frontier sites in and around the Atlantic Ocean.

Tullow said the two firms had signed a non-binding memorandum of understanding to look for the kind of risky oil finds that have become its hallmark and have helped transform it from a little-known prospector into one of the fastest growing energy firms in Europe.

"This partnership combines the knowledge base and specialist capabilities of both companies," Tullow said in a statement accompanying its full-year trading and operational update.

The company also said it is close to reaching a final agreement with the Ugandan government to complete its long-awaited deal to sell two-thirds of its interests in the East African country to Total SA (TOT) and Cnooc Ltd. (CEO). Last month, Uganda's junior energy and minerals minister said the government could approve the sale by the end of January.

"Almost all outstanding issues have now been dealt with," said Tullow.

Separately, Tullow said it expected to post record full-year earnings March 14. The company expects its sales to have doubled in 2011, to $2.3 billion, as its continued exploration success helped it reap the benefit of higher oil prices.

With the company set to embark on an ambitious drilling program at sites across the world, 2011 capital expenditure is expected to have increased 43% to $2 billion, from $1.4 billion last year, a figure at the top end of analyst expectations.

Tullow shares closed up 1.8% Tuesday at 1455 pence. Its stock is 5% higher than at the same point last year.

-By Alexis Flynn, Dow Jones Newswires; [phone], [e-mail]