Tullow Shares Gain After ITLOS Rejects Ivory Coast Suspension Request

By Ed Ballard

LONDON--Shares in Tullow Oil PLC (TLW.LN) gained as much as 9% on Monday after an international tribunal ruled that oil and gas development work can continue on its offshore TEN project, located in territory disputed by Ivory Coast and Ghana.

The Hamburg-based Special Chamber of the International Tribunal of the Law of the Sea, or ITLOS, ruled Saturday that Ghana must stop all drilling in the disputed area, but dismissed Ivory Coast's call for a suspension of all petroleum operations. Tullow has already completed the drilling required for oil to flow next year from its own $4.9 billion development in the disputed zone.

"Development work on the TEN Project continues," the U.K. oil explorer said. "The project is now over 55% complete with all 10 of the wells expected to be online at first oil already drilled. The project remains within budget and on schedule with first oil expected in mid-2016," it added.

At 0722 GMT, shares were trading 18 pence, or 4.3%, higher at 436 pence, having earlier risen as high as 457 pence apiece.

ITLOS has called for "continued cooperation" from the two countries until it reaches a final decision on the boundary dispute, which is expected in late 2017.

"Tullow is not a party to this arbitration process and will now await a decision by the Government of Ghana on how it will implement the provisional measures order," the company added.

Marc Anis-Hanna, oil and gas analyst at VSA Capital, said, "Having this project on stream by mid-2016 is important for Tullow as it would provide the necessary cash flow for the company to support its debt related payments."

"We think that whatever the final outcome is, TLW will be able to pursue the development of the TEN field within either country," he added.

The Jubilee field, a development operated and 35% owned by Tullow which produced 102,000 barrels a day on average in 2014, isn't affected by the dispute, the company said.

Write to Ed Ballard at [e-mail]

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