Tullow Oil to pay maiden dividend

Tullow Oil, the Anglo-Irish oil and gas producer, yesterday announced it would be paying shareholders their first ever dividend next year after reporting record increases in turnover and profits for 2002.

Pre-tax profits for the year to 31 March rose 41 per cent to £22.5m compared with £16m previously, bolstered by a 47 per cent growth in turnover. Tullow, which has interests in the North Sea, Africa and the Indian sub-continent, said it intends to pay a 2003 dividend of 1p per share.

Ironically, Tullow recently topped an annual survey of most unloved companies, an exercise that identifies where a poor share rating is not justified, after its share price rose only 10p over the past three years despite the company achieving an annual cashflow growth of 115 per cent over the same period.

Aidan Heavey, the chief executive, said: "The strategy is working. What we're going for is cashflow per share but because we're in a growth phase things tend to run behind a bit and investors haven't latched on to our solid cashflow base."

Tullow was transformed in 2001 by its £201m acquisition of BP Amoco's gas fields in the southern North Sea, an area that now accounts for 80 per cent of Tullow's total turnover.

The company, which has recently agreed a $100m (£64m) acquisition debt facility, invested £61m in exploration and development last year, securing seven new blocks in the southern North Sea and starting gas production from two CMS III wells there in September last year. The third well is due to begin production later this month.

However, shares in Tullow slipped 4.5p to 71.5p yesterday on the news that its Espoir field in the Ivory Coast, which began producing its first oil in February and its first gas in August last year, had seen lower yields than expected.

Last month its rival North Sea oil producer Paladin announced plans to increase its production by more than half this year after a 75 per cent rise in pre-tax profits and the acquisitions of nine new North Sea wells.

"It's a superb time for independent companies like Paladin and ourselves," Mr Heavey said.