Tullow Oil expects to take a cost of $1.5 billion when it reviews 2019 outcomes, capping a horrible 12 months for the debt-strapped firm.
The pretax sum of impairments and exploration write-offs displays a decrease oil-price forecast and a minimize in reserves at a subject in Ghana. Tullow’s belongings within the West African nation carried out poorly in 2019, a 12 months that additionally noticed delays at East African tasks, disappointing drilling leads to Guyana and the resignation of Chief Executive Officer Paul McDade.
While Wednesday’s buying and selling replace indicated but extra obstacles for the corporate — together with the suspension of a pilot undertaking in Kenya — Tullow maintained its 2020 manufacturing steerage of 70,000 to 80,000 barrels a day and stated it expects underlying free money move of a minimum of $150 million.
“The information at the moment reaffirms the outlook for 2020 and will enhance certainty,” analysts at Davy Research stated in a observe. “Tullow has taken the chance to reset the stability sheet.”
The shares rose 1% to 59.76 pence at 11:28 a.m. in London, after earlier sliding 6.7%. The inventory plummeted 64% final 12 months — essentially the most on the Stoxx Europe 600 Oil & Gas index — amid setbacks in Guyana and decrease manufacturing forecasts in West Africa. The firm is now conducting a assessment of its enterprise and operations, leading to a “smaller, extra centered interim government workforce,” it stated on Wednesday.
The new management workforce is half the scale of the earlier line-up underneath McDade, comprising Executive Chairman Dorothy Thompson, Chief Financial Officer Les Wood, Chief Operating Officer Mark MacFarlane and Executive Vice President for Change, Ian Cloke. The seek for a brand new CEO is underneath means and each inner and exterior candidates can be thought-about, Thompson stated.
After years of specializing in Africa, Tullow plowed funds into drilling off Guyana final 12 months in a intently watched marketing campaign, following earlier finds there by Exxon Mobil Corp. Tullow struck oil a number of instances, although a lot of it turned out to be heavy, sulfurous crude.
The firm is now slowing the tempo of exercise within the South American nation because it evaluations final 12 months’s outcomes, in keeping with COO MacFarlane. It’s “extremely unlikely” there can be one other effectively drilled there in 2020, he stated on a name. Elsewhere on the continent, a effectively off Peru is deliberate this month.
Tullow’s $1.5 billion cost displays a revision to reserves on the TEN undertaking’s Enyenra subject in Ghana and a drop within the long-term oil-price assumption to $65 a barrel from $75, the corporate stated. It additionally features a writedown of exploration prices, primarily in Kenya and Uganda.
The cost “highlights the disappointing observe report of capital allocation over the previous few years,” however “clears one other detrimental out of the best way” forward of full 2019 outcomes on March 12, Citigroup analysts stated in a observe. The buying and selling replace is “broadly consistent with expectations,” they stated.
Please depart feedback and suggestions under