Tullow Oil, the independent oil and gas exploration and production group, has reported pre-tax profits of £114.2m for 2007, a massive decrease of 57% on last year's figure due to lower UK gas prices and exploration write-offs.

The fall was much greater than expected by analysts who predicted, on average, £156m.

Basic earnings per share rapidly declined by 71% to 7.10 pence per share from 24.23 pence per share.

Revenues rose by 10% to £639.2m in a year in which the company said it had recorded its largest ever discovery, the Jubilee field offshore Ghana.

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The company expects European oil and gas production to fall further in 2008 to 24,500 barrels of oil equivalent per day from 28,500 in 2007.

Aidan Heavey, CEO, said: "Exceptional exploration success, and strong production in 2007 have created an opportunity to deliver a transformational step change in our business.

"Our key priorities for 2008 are to appraise both the Jubilee field in Ghana and the Lake Albert Rift Basin in Uganda, while also testing the significant exploration potential of our wider portfolio.

"Tullow has the capability to grow substantially in the coming years and I believe we have the strategy, the assets and the team to achieve this. The outlook for 2008 and beyond is extremely promising."

(CD/JM)