drilling update, page-3

Both these companies have links to HDR interests as you probably know, just thought I put them up for your perusal. :)


Tullow Oil, a buy at 72 1/2p in October 2000, closed last week at 130 3/4p after making its first half-time payout alongside its interim results, which showed profits up from £15 million to £22.6 million.


Tullow doubled its size this year with the £320 million takeover of Energy Africa, though only one month's figures from the acquisition were included in the interim results. Energy Africa is bedding in well, second-half production will be double that of the first half and Tullow is benefiting from higher gas prices.


In the medium term, Tullow needs to deliver on its exploration potential, but for now the shares, trading on a multiple of about 14 times forecast earnings for this year, are worth sticking with.


We would also hold Premier Oil. Its shares slipped last week when it reported a 13% rise in interim profits to £14.5 million but warned that second-half profits would not match the first half.


Shares in Premier closed last week at 607 1/2p. We rated them a buy at 455p in January and again at 590p last month. With its drilling exploration programme poised to accelerate, they are worth holding.